Heinz (HNZ) is one of the biggest food companies out there with a market cap of nearly $17 billion. The company is most known for its ketchup but it sells numerous other products. After falling by about 40% in the 2008-2009 time period, the stock has gained back all of those losses and then some and is now approaching all-time highs set in the late 1990's.
Being a consumer staples company, Heinz is known for its stable financial results, especially domestically. However, it is has been picking up growth in the emerging markets. For its Q3, emerging markets were the biggest growth driver as they delivered organic sales growth of 19.8% and generated more than 20% of the company's total sales in the quarter. On the valuation side, HNZ is in a good spot as all of the value metrics agree that the stock is fairly valued. Although the businesses and brands of Heinz are very attractive, at today's prices its best to avoid them. Below is an in depth look at the valuation metrics and stock chart.
Valuation: H.J. Heinz's trailing 5 year valuation metrics suggest that the stock is fairly valued as all of the metrics are close to their respective 5 year averages. H.J. Heinz's current P/B ratio is 5.9 and it has averaged 7.1 over the past 5 years with a high of 9.4 and low of 5.2. H.J. Heinz's current P/S ratio is 1.5 and it has averaged 1.4 over the past 5 years with a high of 1.7 and low of 1.1. H.J. Heinz's current P/E ratio is 17.6 and it has averaged 16.5 over the past 5 years with a high of 20 and low of 11.9.
Price Target: The consensus price target for the analysts who follow H.J. Heinz is $56. That is upside of 7% from today's stock price of $52.92 and suggests that the stock is fairly valued at these levels. This also suggests that the stock has limited upside and should be avoided at its current stock price.
Forward Valuation: H.J. Heinz is currently trading at about $53 a share with analysts expecting EPS of $3.59 next year, an earnings increase of 7% y/y, for a forward P/E ratio of 14.7. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. ConAgra Foods (CAG) is currently trading at about $26 a share with analysts expecting EPS of $1.93 next year, an earnings increase of 8% y/y, for a forward P/E ratio of 13.4. Kraft Foods (KFT) is currently trading at about $39 a share with analysts expecting EPS of $2.8 next year, an earnings increase of 11% y/y, for a forward P/E ratio of 13.9. Campbell Soup (CPB) is currently trading at about $34 a share with analysts expecting EPS of $2.51 next year, an earnings increase of 6% y/y, for a forward P/E ratio of 13.5. The mean forward P/E of H.J. Heinz's competitors is 13.6 which suggests that H.J. Heinz is fairly valued relative to its publicly traded competitors.
Earnings Estimates: H.J. Heinz has beat EPS estimates 3 times in the past 4 quarters. The company's EPS figures have come in between -1 cents and 9 cents from consensus estimates or about -1.4% to 10.5% from analyst estimates. The company's earnings come been relatively close to consensus estimates which suggests that analysts are good at projecting the company's results and share upside from earnings surprises will be limited.
Price Action: H.J. Heinz is up 2.6% over the past year, underperforming the S&P 500, which is up 5.5%. Looking at the technicals, the stock is currently above its 50 day moving average, which sits at $52.78 and above its 200 day moving average, which sits at $51.57.