The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Kraft Heinz (NASDAQ:KHC) and the rest of the shelf-stable food stocks fared in Q2.
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
The 21 shelf-stable food stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 0.7% below.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. Thankfully, shelf-stable food stocks have been resilient with share prices up 8.6% on average since the latest earnings results.
Kraft Heinz (NASDAQ:KHC) The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ:KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Kraft Heinz reported revenues of $6.48 billion, down 3.6% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a mixed quarter for the company with a decent beat of analysts’ gross margin estimates but a miss of analysts’ organic revenue growth estimates.
“Our second quarter net sales growth came in lower than originally anticipated, as consumer sentiment remains cautious,” said Kraft Heinz CEO Carlos Abrams-Rivera.
Interestingly, the stock is up 6.6% since reporting and currently trades at $36.09.
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Best Q2: BellRing Brands (NYSE:BRBR) Spun out of Post (NYSE:POST) Holdings in 2019, Bellring Brands (NYSE:NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
BellRing Brands reported revenues of $515.4 million, up 15.6% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with an impressive beat of analysts’ gross margin and organic revenue growth estimates.
The market seems happy with the results as the stock is up 16.8% since reporting. It currently trades at $57.68.
Weakest Q2: Lamb Weston (NYSE:LW) Best known for its Grown in Idaho brand, Lamb Weston (NYSE:LW) produces and distributes potato products such as frozen french fries and mashed potatoes.
Lamb Weston reported revenues of $1.61 billion, down 4.9% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted underwhelming earnings guidance for the full year and a miss of analysts’ organic revenue growth estimates.
Lamb Weston delivered the weakest full-year guidance update in the group. As expected, the stock is down 19.5% since the results and currently trades at $63.29.
Simply Good Foods (NASDAQ:SMPL) Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Simply Good Foods reported revenues of $334.8 million, up 3.1% year on year. This print met analysts’ expectations. Overall, it was a satisfactory quarter as it also recorded a decent beat of analysts’ gross margin estimates.
The stock is down 7.6% since reporting and currently trades at $33.41.
SunOpta (TSX:SOY) (NASDAQ:STKL) Committed to clean-label foods, SunOpta (NASDAQ:STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of natural and organic products.
SunOpta reported revenues of $171 million, up 21.1% year on year. This result surpassed analysts’ expectations by 6.9%. Overall, it was a very strong quarter as it also produced an impressive beat of analysts’ earnings estimates and full-year revenue guidance exceeding analysts’ expectations.
SunOpta achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 27% since reporting and currently trades at $6.72.
This content was originally published on Stock Story
