Please ensure Javascript is enabled for purposes of website accessibility

Why Kraft Heinz Stock Fell 16% in December

By Demitri Kalogeropoulos – Updated Apr 15, 2019 at 11:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are sour on the company's acquisition strategy.

Check out the latest Kraft Heinz earnings call transcript.

What happened

Consumer foods specialist Kraft Heinz (KHC 1.30%) shareholders trailed the market last month as the stock lost 16% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline put a punctuation mark on a difficult year for the stock, which lost over 40% in 2018 to end up as one of the worst performers in its index.

So what

December's swoon was a continuation of investors' pessimism about Kraft Heinz's growth opportunities. The company said in early November that its rebound plan was starting to take root, and CEO Bernardo Hees pointed to an almost 3% boost in organic sales as support for that claim. Still, gross profit has declined over the last nine months even as expenses rose, leading to far lower profitability in 2018.

A child eating fries with ketchup.

Image source: Getty Images.

Investors aren't convinced that Kraft Heinz can acquire itself out of its demand challenges, either. It is reportedly bidding for Campbell Soup's international portfolio at around $3 billion, but shares fell following that news last month.

Now what

Kraft Heinz's fourth-quarter report will show whether the company was able to build on its organic sales growth momentum to speed sales gains while raising, or at least protecting, average prices. That announcement in early February could begin to shift the story for this stock, but investors aren't expecting to hear much good news in the report.

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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.