Markets
KHC

Why Kraft Heinz Stock Gained 16% in October

What happened

Kraft Heinz (NASDAQ: KHC) shareholders beat the market last month as the stock gained 16% compared to a 2% increase in the S&P 500 index, according to S&P Global Market Intelligence. The rally erased only some of investors' recent losses on this struggling stock, though, and shares are still down over 20% so far in 2019 compared to a surge of over 22% in the S&P 500.

A child eating french fries with ketchup.

Image source: Getty Images.

So what

October's rally came almost entirely on the month's final trading day, following Kraft Heinz's third-quarter earnings report. In that announcement, CEO Miguel Patricio and his team revealed continued sales and profit challenges but nonetheless issued positive comments about the future. Revenue trends improved slightly, with organic sales falling 1.1% compared to 1.5% in the second quarter.

Now what

Patricio told investors that management is getting a grip on the key drivers behind the consumer staples giant's poor sales trends, and the slight organic revenue improvement added to that optimism. However, this stock isn't likely to make sustainable gains until executives can demonstrate a path back toward market-beating sales growth and steadily rising earnings. Kraft Heinz's latest report contained no real evidence of that progress, which would show up in metrics like rising sales volumes and improving operating margin. Thus, look for shares to continue trailing the market until these recovery trends start pointing higher.

10 stocks we like better than Kraft Heinz
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Kraft Heinz wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 1, 2019

 

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

KHC

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More