For Immediate Release
Chicago, IL – May 12, 2023 – Zacks Equity Research shares The Kraft Heinz Company KHC as the Bull of the Day and The Estee Lauder Companies EL as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Kellogg's K, Wix.com WIX and Celsius Holdings CELH.
Here is a synopsis of all five stocks:
Bull of the Day:
The Kraft Heinz Company is one of North America's largest consumer packaged food and beverage companies. A few of its products include condiments and sauces, cheese, dairy, meals, meats, refreshment beverages, coffee, and other grocery products.
Currently, the stock boasts the highly-coveted Zacks Rank #1 (Strong Buy), indicating that analysts have become bullish on its near-term outlook.
In addition, the stock resides in the Zacks Consumer Staples sector, which is currently ranked in the top 25% (4 out of 16) of all Zacks Sectors. With a favorable earnings outlook, let's take a look at a few other attractive aspects that KHC shares are displaying.
Share Performance & Quarterly Results
KHC shares have found buyers over the last month, climbing 3.5% in value and outperforming the S&P 500 modestly. As we can see in the chart below, the market reacted positively to the company's latest release, with shares getting a nice boost post-earnings.
Regarding the latest release, the results were solid. Kraft Heinz posted earnings of $0.68 per share, 13% above the Zacks Consensus EPS Estimate. Quarterly revenue totaled $6.5 billion, modestly above expectations and improving 7.3% from the year-ago period.
Pricing power helped drive the strong results, with the print reflecting the 13th consecutive quarter of Kraft Heinz exceeding the Zacks Consensus EPS Estimate.
The company's shares aren't stretched regarding valuation, with the current 14.2X forward earnings multiple sitting just above the five-year median and well below the Zacks Consumer Staples sector average.
In addition, KHC shares trade at a 1.8X forward price-to-sales ratio, nearly in line with the five-year median and again well below the Zacks sector average.
KHC carries a Style Score of "C" for Value.
For those seeking income, KHC shares provide precisely what you're looking for. The company's annual dividend currently yields 3.9%, well above the Zacks sector average of 2.7%.
Still, it's worth noting that the company hasn't increased its payout in some time, perhaps steering away those who seek consistent dividend growth.
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
The Kraft Heinz Company would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
The Estee Lauder Companies is one of the world's leading manufacturers and marketers of skincare, makeup, fragrance, and hair care products. The company's products are sold through department stores, mass retailers, company-owned retail stores, hair salons, and travel-related establishments.
Analysts have taken a bearish stance on the company's earnings outlook, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).
Share Performance & Quarterly Results
EL shares have struggled to find traction over the last month, down nearly 20% and underperforming relative to the general market. As we can see by the red arrow circled in the chart below, the market had a poor reaction to EL's latest quarterly release.
In the above-mentioned release, EL posted EPS of $0.47, 4% below expectations and reflecting a 75% year-over-year pullback. Still, top line results showed some positivity, with EL beating sales expectations by roughly 1%.
It's worth noting that the recent EPS miss broke a long-standing trend of positive earnings surprises.
EL shares may not entice value-focused investors, reflected by its Style Score of "F" for Value. Presently, Estee Lauder shares trade at a 51.2X forward earnings multiple, well above the 36.2X five-year median.
The company's forward price-to-sales ratio presently works out to be 4.5X, nearly in line with the five-year median and below the Zacks sector average.
The company rewards its shareholders, with its annual dividend currently yielding a respectable 1.3%.
Undoubtedly worth highlighting, the company has shown a commitment to increasingly rewarding investors, carrying a 12% five-year annualized dividend growth rate.
A recent EPS miss on the minds of investors and negative earnings estimate revisions from analysts paint a challenging picture for the company's shares in the near term.
The Estee Lauder Companies is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook over the last several months.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
3 Stocks Seeing Recent Analyst Upgrades
Price targets can be helpful for investors, as they can facilitate a more structured trade with pre-determined exit levels. Of course, it's important to remember that not all stocks reach analysts' forecasted levels.
Price targets are based on a variety of factors, including the company's financial performance, industry trends, and overall market conditions.
And recently, three stocks – Kellogg's, Wix.com and Celsius Holdings – have all seen favorable upgrades from analysts. Below is a chart illustrating the year-to-date performance of all three, with the S&P 500 blended in as a benchmark.
Let's take a closer look at how each currently stacks up.
Celsius, a current Zacks Rank #1 (Strong Buy), operates within the functional energy drinks and liquid supplement categories internationally and in the United States. BofA Securities recently raised its PT for CELH shares from $98 to $125 per share.
The upgrade followed better-than-expected results on May 9th; CELH exceeded the Zacks Consensus EPS Estimate by more than 80% and delivered a 15% revenue surprise. As shown below, the company's revenue growth has been stellar.
In 2022, the company signed a $550 million distribution agreement with heavyweight PepsiCo, which is undoubtedly paying off.
Kellogg's manufactures and markets ready-to-eat cereals and convenience foods, carrying a balanced portfolio of products. JPMorgan raised its PT for Kellogg's shares from $68 to $72 per share following a beat-and-raise quarter.
In the release, the cereal giant posted a 10% EPS beat and raised guidance for organic-based growth in net sales. Quarterly revenue totaled $4.1 billion, 2.4% above expectations and improving 13% from the year-ago period.
Similar to other defensive stocks, Kellogg's shares could entice income-focused investors, with the current 3.4% annual dividend yield sitting well above the Zacks Consumer Staples sector average.
Dividend growth is there, too, with the company carrying a 1.4% five-year annualized dividend growth rate.
Wix.com, a current Zacks Rank #2 (Buy), is a cloud-based web development platform offering solutions that enable consumers to develop customized websites and application platforms. Raymond James upgraded the stock, announcing a PT of $96 per share.
It's hard to ignore the company's growth trajectory, with earnings forecasted to jump significantly in its current fiscal year (FY23) and a further 55% in FY24. The projected earnings growth comes on top of forecasted Y/Y revenue climbs of 9.5% in FY23 and 11.7% in FY24.
Analysts have remained bullish for the company's current fiscal year for some time, with the FY23 EPS Estimate being revised notably higher since the end of May last year.
Price targets can help investors structure a trade, as they reflect current sentiment around the stock.
And recently, all three stocks above have received favorable upgrades from analysts.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report