H. J. Heinz Company Earnings: Margins Grow, Snapping This Streak

S&P 500 (NYSE:SPY) component H. J. Heinz Company (NYSE:HNZ) reported net income above Wall Street’s expectations for the first quarter. HJ Heinz manufactures food products, including ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products.

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H. J. Heinz Company Earnings Cheat Sheet

Results: Net income for H. J. Heinz Company rose to $258 million (80 cents per share) vs. $226.1 million (70 cents per share) in the same quarter a year earlier. This marks a rise of 14.1% from the year-earlier quarter.

Revenue: Fell 2% to $2.79 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: H. J. Heinz Company reported adjusted net income of 87 cents per share. By that measure, the company beat the mean estimate of 80 cents per share. It fell short of the average revenue estimate of $3.07 billion.

Quoting Management: “Heinz delivered strong results and our 29th consecutive quarter of organic sales growth, despite the difficult economic environment, higher commodity costs and headwinds from foreign currency,” said Chairman, President and CEO William R. Johnson. “Heinz is off to a good start in Fiscal 2013, led by our trio of growth engines – Emerging Markets, Global Ketchup and our Top 15 Brands.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the first quarter of the last fiscal year, which saw revenue rise 14.9%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the fourth quarter of the last fiscal year, by 10 cents in the third quarter of the last fiscal year, and by one cent in the second quarter of the last fiscal year.

Last quarter, gross margins grew to 35.9%, a 1.3 percentage points difference from the year-earlier quarter. This breaks a streak of two consecutive quarters of shrinking margins.

Last quarter’s profit increase comes after net income dropped in the prevoius quarter. In the fourth quarter of the last fiscal year, net income declined 21.7% to $175.3 million.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for second quarter has fallen from 85 cents per share to 84 cents. For the fiscal year, the average estimate has moved down from $3.59 a share to $3.52 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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