Heinz Reaches 52-Week High - Analyst Blog

By Zacks | February 04, 2013 AAA

H. J. Heinz Company (HNZ), maker of major brands like Heinz Ketchup and Master soya sauces, recently reached a 52-week high of $61.12 on Feb 01, 2013.

Growth Drivers

Heinz Company has been gaining momentum, prior to the release of its third quarter 2013 results on Feb 27. The ketchup and sauce company has outpaced earnings estimates for four straight quarters.

In the run up to the release, we witness rising earnings estimates, reflecting the positive guidance provided by the company during the second quarter of 2013.

Heinz expects earnings in the range of $3.52-$3.62 per share in fiscal 2013. The Zacks Consensus Estimate is currently pegged at $3.53. The Zacks Consensus Estimate for third quarter fiscal 2013 is 89 cents per share.

The company expects organic sales to grow during the second half of fiscal 2013 on the back of increased innovations. The company plans to increase its investments in marketing initiatives, emerging markets and the SAP program. Gross margins are also expected to grow in the second half.

Heinz's long-term fundamentals are also encouraging, given the company's robust brand portfolio, continued strong growth in emerging markets, strong marketing investments and ongoing cost saving efforts.

The company has a significant presence outside the U.S. The company has delivered positive growth in Europe despite the challenging conditions. Most importantly, Heinz is generating solid growth in the emerging markets of India, China and Indonesia.  

The company has made several acquisitions in the past, which include the Brazilian company Coniexpress, acquired in Apr 2011 and Chinese soya sauce maker Foodstar Holding, added in Nov 2010. The company is also involved in divestures of some of its less profitable business, so that the company can focus on its profitable brands and products, which in turn can boost long-term growth.

H. J. Heinz Company carries a Zacks Rank #2 (Buy).

Other stocks worth a look in the industry are Flowers Foods, Inc. (FLO), Ingredion Incorporated (INGR) and J&J Snack Foods Corp. (JJSF), each holding a Zacks Rank #1 (Strong Buy).

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