Shares of consumer-staples giant Kraft Heinz (KHC 0.53%) dropped on Wednesday after the company reported results for the fourth quarter. The company's brands are well known and popular, but sales volume nonetheless fell in 2023, disappointing investors. As of 11:30 a.m. ET, Kraft Heinz stock was down about 6%.
An all-too-familiar story
Kraft Heinz disappointed the market with its top-line results. The company's 2023 net sales were up 0.6%, but this was due to its price hikes. By contrast, its sales volume and mix fell by 5.5% year over year. That was in line with a broader trend this earnings season -- sales volumes for brand-name consumer-goods companies have fallen as they've raised their prices.
NASDAQ: KHC
Key Data Points
Turning to the bottom line, things initially looked much better. Kraft Heinz enjoyed full-year net income of $2.8 billion, up a whopping 20% from 2022. However, its results in 2022 included a large one-time impairment charge while its 2023 results did not. Factoring that out of the calculation, Kraft Heinz's adjusted earnings per share (EPS) only rose 7% year over year.
The market had expected a little more, which is why Kraft Heinz stock is down Wednesday.
Not much to look forward to in 2024
Management is guiding for full-year organic net sales growth of 2% at most in 2024. And it's guiding for adjusted EPS growth of 3% at most. That's not much to get excited about, which helps explain why the stock trades at an inexpensive price-to-earnings ratio of less than 15. In short, it's cheap because it deserves to be cheap.
That said, Kraft Heinz stock may still have value as an income investment. At the current share price, the stock's dividend yield is close to 4.5% and is relatively safe, which is a nice silver lining for long-term shareholders.
