9 Best Pizza Stocks to Buy Now

3. The Kraft Heinz Company (NASDAQ:KHC)

Number of Hedge Fund Holders: 43

Upside Potential: 9.70%

The Kraft Heinz Company (NASDAQ:KHC), which is one of the biggest food and beverage producers in North America, has cheese, pizza, dough, sauces, and a whole other lot of products in its product portfolio.

In the 2^nd quarter of 2024, The Kraft Heinz Company (NASDAQ:KHC) saw a 3.6% fall in net sales to $6.5 billion, attributed to a negative 1% impact of foreign currency, and 0.2% from divestitures. Pricing and volume mix had an impact on organic sales which fell by 2.4%; prices were up by 1%, but the volume fell by 3.4%, especially in North America and the international market, wherein the consumer sentiment was down; however, the emerging market saw a positive change.

On the other hand, non-cash impairment losses worth $854 million resulted in a dramatic fall of 62.1% in operating income, taking it to $0.5 billion. Adjusted operating income, however, saw an uptick of 2% from the same quarter of 2023, resulting in an adjusted operating income of $1.4 billion, which was an outcome of lower costs and efficient pricing. Also, adjusted EPS experienced a decrease of only 1.3% to $0.78 per share, whereas non-adjusted EPS fell by 90.1% because of massive impairment loss; this reduction in a decrease on an adjusted basis was because of tax benefits carried forward from last year and higher adjusted operating income.

The higher adjusted operating income and robust working capital flow (predominately accounts payable and inventory) resulted in an 8.1% increase in the net cash of the company to $1.7 billion from the same quarter in 2023; free cash flow, on the other hand, stood at $1.2 billion.

While the company has posted a full-year adjusted EPS guidance, wherein it expects 1%-3% growth in its adjusted earnings, the company has lowered its organic net sales guidance, now expecting it to remain flat in 2024, as compared to 2023.

Thus, strong cash flow generation and cost efficiency are aspects that compel one to believe in the outlook of the stock predicted by the analysts: 16 analysts are expecting earnings per share (EPS) of $0.75 and $0.81 per share in the third and fourth quarters, respectively.

As such, 43 hedge funds are bullish on the stock as of Q2 2024, while institutional ownership represents 54% of the company’s shareholding. The stock has an upside potential of 9.7% according to 20 analysts.