Honestly speaking, the SEC probe results aren't, to my knowledge, completely out yet, and it's due to an alleged defrauding done by major shareholder company 3G Capital of covering up the bad results of Kraft Heinz's sales as well as transferring away a about US 1 billion in value of the stock last month, selling at "inflated prices". Without the full information regarding what exactly happened I am extremely hesistant to put in any money into Kraft Heinz currently.
And yes, the price is low now, currently the forward P/e ratio is about 8.67, lower than competitor General Mills (14.54 according to yahoo finance), but the main driving force behind Kraft Heinz's growth is not innovation, but slashing of product prices, which has led to a growth in sales in 2018, but a fall in profit margins. I don't believe that their model is sustainable in the long run if they wish to beat out competitors such as General Mills that have shifted to healthier alternatives to their mainstay products. The downside risk is still very high, and if SEC were to find conclusive evidence that books were cooked and foulplay was involved regarding this potential insider trading and coverup, you can imagine the freefall in price that the stock will experience.
The volatility and risk is something I am not comfortable with, so in my opinion I will not purchase this stock any time soon, until all of this blows over perhaps, and the business model of KHZ becomes much more competitive and relevant in today's consumer market.
Honestly speaking, the SEC probe results aren't, to my knowledge, completely out yet, and it's due to an alleged defrauding done by major shareholder company 3G Capital of covering up the bad results of Kraft Heinz's sales as well as transferring away a about US 1 billion in value of the stock last month, selling at "inflated prices". Without the full information regarding what exactly happened I am extremely hesistant to put in any money into Kraft Heinz currently.
And yes, the price is low now, currently the forward P/e ratio is about 8.67, lower than competitor General Mills (14.54 according to yahoo finance), but the main driving force behind Kraft Heinz's growth is not innovation, but slashing of product prices, which has led to a growth in sales in 2018, but a fall in profit margins. I don't believe that their model is sustainable in the long run if they wish to beat out competitors such as General Mills that have shifted to healthier alternatives to their mainstay products. The downside risk is still very high, and if SEC were to find conclusive evidence that books were cooked and foulplay was involved regarding this potential insider trading and coverup, you can imagine the freefall in price that the stock will experience.
The volatility and risk is something I am not comfortable with, so in my opinion I will not purchase this stock any time soon, until all of this blows over perhaps, and the business model of KHZ becomes much more competitive and relevant in today's consumer market.