Earnings Estimates (High/Mean/Low): $0.74 / $0.726 / $0.69
Amidst growing fears of a double-dip in both the US and international economies, many investors have begun to find high-beta names unsuitable for their portfolio. A quick glance at the yield on a 10-Year Treasury is evidence enough of this flight to safety, and, as such, companies like Heinz (NYSE: HNZ) continue to attract Street attention. With FQ1 earnings scheduled for this Wednesday, we’ll get a nice peak into the state of what should be a stable, relatively recession-proof business, ketchup.
HNZ has built up a solid chart over the past few months. After breaking its 200-day moving average on 6/28, shares retook the line less than a week later and have since successfully re-tested the mark twice, first on 7/30 and then again on 8/12. Shares closed up last week at $46.85 and are up 8.4% YTD.
HNZ has beaten estimates in ten of the past eleven quarters and the past eight in a row. Mean estimates of $0.726 represent an 8% YoY gain. The conference call is currently scheduled for 8:30 a.m. Eastern the morning of the report.
As we discussed above, investor sentiment has largely begun to swing in favor of “safety” names. HNZ is particularly well-suited to be mentioned as a part of that group, as much of their earnings, and a growing portion thereof, are derived from higher-growth overseas markets. A dividend yield of nearly 4% is just the icing on the cake.
There’s little reason to open up a new position ahead of the report, as the climate of negativity is liable to affect post-earnings trading in any number of ways. On a post-earnings selloff, look to get behind shares on a test of the 200-day, and on a pop look to be a buyer on a breakout of the aforementioned range. Either way, you should consider HNZ a solid candidate for your portfolio, particularly if you’re looking to incorporate additional elements of stability.
Disclosure: No holdings in HNZ.