Heinz Not Playing Catch-Up


By Valuentum

Food giant Heinz (HNZ) reported decent first-quarter results on Aug. 29, despite global macroeconomic headwinds. The firm saw reported revenue decline 1.5% to $2.8 billion, which was approximately in line with consensus expectations. Profit from continuing operations was $0.87 per share, up 10% from a year ago and several pennies higher than consensus expectations. Even though profits grew more than expected, the firm reiterated its full-year earnings guidance of $3.52-$3.63 per share. Shares score a respectable 6 on the Valuentum Buying Index, which combines a rigorous discounted cash flow process and momentum indicators. The company is trading in our fair value estimate range.

Though reported growth looked tame, on an organic (currency-neutral) basis revenue increased 4.8%, which Heinz identified as its 29th consecutive quarter of revenue growth. Gross margins increased just 10 basis points year over year, as rising prices managed to barely offset higher input costs. The firm announced Tuesday at its annual shareholders' meeting that it intends to invest heavily in expanding its presence in emerging markets, which experienced an impressive 19% revenue growth during the second quarter.


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