Can Kraft Heinz's Away From Home Expansion Support Long-Term Growth?

The U.S. performance included an approximately 150-basis-point benefit from World Cup-driven demand, along with the impact of lapping a prior-year inventory deload. KHC does not expect these factors to repeat. Excluding these impacts, the business benefited from ongoing net-new customer wins, an important element of its efforts to expand the channel.

Emerging Markets are also contributing to the Away From Home push. Organic sales in the channel grew around 5% in these markets during the latest quarter as Kraft Heinz continued expanding distribution. The company expects Global Away From Home organic sales to grow at a low-single-digit rate in the third quarter. The key focus from here is the underlying expansion of the business as temporary benefits fade. 

Kraft Heinz is seeking growth through net-new business wins, greater quick-service restaurant penetration, expansion into non-commercial channels and a broader product presence beyond ketchup. Continued progress across these areas will determine how effectively Away From Home develops into a more sustained contributor to sales growth.

Shares of KHC have rallied 5.5% over the past three months compared with the industry’s growth of 9.8%.

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Better-Ranked Stocks to Consider

Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

The Zacks Consensus Estimate for Darling’s current fiscal-year sales calls for 12.8% growth from the prior-year levels. The consensus estimate for current fiscal-year earnings per share (EPS) stands at $6.98, which implies substantial growth from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.

The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.

The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.

US Foods Holding Corp. USFD engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2 (Buy). US Foods Holding delivered a trailing four-quarter earnings surprise of 1.5%, on average.

The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.3% and 16.3%, respectively, from the year-ago figures.

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This article originally published on Zacks Investment Research (zacks.com).

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