Kraft-Heinz Mess

(Liam Thompson) #22

Totally agree, this is a great opportunity if people still think it has value. Just consider this 26% off the price you were about to pay for it. If there’s a time to invest it’s now - but as Rollingskies sad it’s not going to instantly bounce back :rocket:

(Kieran) #23

So thinking about this a bit more, 2018 adjusted EPS was $3.53, if you compare that to the earnings of premier foods in the U.K. which has been in a real mire for a long time, a P/E ratio of 5-6 become not unfathomable. At least if stagnating revenues and declining earnings persist. That would place the stock at around $17.65-$21.20

At the moment the dividend probably protects against such a fall but how safe is that exactly? The balance sheet doesn’t look strong, with around $38B in debt that comes in around 5.5xEBITDA. The interest is going to be crippling and further dividend cuts may take place in order to address this large debt pile.

Of course I could be wrong! Sales could pick up and earnings could increase which would lead to a much better outlook and valuation. However I’m sceptical this is going to happen any time soon if indeed at all.