KHC - Kraft Heinz: I Think The Cheap Valuation Belies Its Profitability Improvements

2024-03-05 07:26:44 ET

Summary

• Kraft Heinz reported mixed Q4 and full-year 2023 results, with slow topline growth overshadowing operational profitability progress.
• The soft macro environment is largely to blame for flatline YoY net sales, but the company's profitability improvement indicates solid operational strength.
• KHC stock remains attractively priced at a potential 36% discount with a great 4.55% dividend yield further sweetening the deal.
• Long-term outlook is positive in my opinion with potentially 5% YoY revenue growth on the horizon.
• Strong Buy rating maintained.

Investment Thesis

The Kraft Heinz Company ( KHC ) reported a mixed set of Q4 and full-year 2023 results.

Superb operational profitability progress driven by supply chain optimization and working capital improvements appears to have been mostly overshadowed by slow topline growth.

I believe the soft macro backdrop is largely accountable for their flatline YoY net sales and see their improved profitability and pricing power as an indicator of operational strength and brand relevance....

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