1. The Kraft Heinz Company (NASDAQ:KHC)
Forward P/E Ratio: 9.71
The Kraft Heinz Company (NASDAQ:KHC) is an American multinational food company that specializes in a wide range of snacks and beverages. In the third quarter of 2024, the company delivered mixed results, falling short of analysts’ expectations. Revenue declined by 2.85% year-over-year to $6.38 billion. However, the company saw a modest improvement in its gross profit margin, which rose by 20 basis points to 34.2%. It is prioritizing investments in marketing, research and development, and technology to enhance consumer-driven solutions and support long-term revenue growth. These efforts are backed by its ability to optimize operations and maintain strong cash flow. In addition, the company continues to focus on expanding both its established and emerging food and beverage brands globally.
The Kraft Heinz Company (NASDAQ:KHC) was created through the merger of Kraft and Heinz, aiming to drive profitability by cutting costs. However, the integration did not unfold as expected, resulting in a leadership transition. The company has since shifted its focus to a core group of stronger-performing brands. Despite previous setbacks, Kraft Heinz has been making progress, particularly in strengthening its financial position. Since reaching its highest debt levels in 2020, the company has made substantial progress in reducing leverage, demonstrating its ability to manage current challenges and realign its business for long-term growth.
Despite ongoing challenges, income-focused investors may find reassurance in The Kraft Heinz Company (NASDAQ:KHC)’s solid cash position. In the latest quarter, the company demonstrated strong cash generation, with operating cash flow for the year rising 6.7% to $2.8 billion compared to the previous year. Free cash flow also saw a 9.7% increase, reaching $2 billion. Moreover, the company distributed $1.5 billion in dividends to shareholders over the first nine months of the year. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.41%, as of January 28.
Overall The Kraft Heinz Company (NASDAQ:KHC) ranks first on our list of the best value stocks according to Warren Buffett. While we acknowledge the potential for KHC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KHC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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