Kraft Heinz Q1 Earnings Beat Estimates Despite Organic Sales Dip

The Kraft Heinz Company KHC posted first-quarter 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals.KHC’s Quarterly Performance: Key InsightsKraft Heinz posted adjusted earnings of 58 cents per share, beating the Zacks Consensus Estimate of 50 cents. Quarterly adjusted earnings fell 6.5% year over year, mainly due to lower adjusted operating income, partially offset by reduced tax expenses on adjusted earnings.Kraft Heinz Company Price, Consensus and EPS Surprise Kraft Heinz Company price-consensus-eps-surprise-chart | Kraft Heinz Company QuoteThe company generated net sales of $6,047 million, up 0.8% year over year. The metric beat the Zacks Consensus Estimate of $5,908 million. The increase included a favorable 1.9 percentage-point impact from foreign currency, partially offset by a 0.7 percentage-point drag from divestitures. However, organic net sales declined 0.4% compared with the prior-year period. Our model expected a 3.2% dip in organic sales.Pricing contributed positively, rising 0.8 percentage points across all segments, mainly driven by price increases in select categories to offset higher input costs. In contrast, volume/mix fell 1.2 percentage points, with declines across all segments. This weakness was largely due to reduced demand in coffee, cold cuts and Indonesia, which outweighed gains from seasonal factors such as the shift in Easter timing.The adjusted gross profit of $2,064 million increased from the $2,061 million reported in the year-ago quarter. However, adjusted gross margin contracted 30 bps to 34.1%. We expected an adjusted gross margin decline of 120 bps to 33.1%.Adjusted operating income declined 11.8% year over year to $1,058 million. The drop was primarily caused by higher advertising expenses, inflationary pressures in manufacturing and logistics that exceeded efficiency gains, and unfavorable volume/mix. These headwinds more than offset the benefits from higher pricing, one-time procurement cost recoveries and favorable foreign currency effects.Decoding KHC’s Segment-Wise ResultsNorth America: Net sales of $4,458 million declined 0.7% year over year. Organic sales fell 1.1%. We expected a 4% decline in segment organic sales. During the quarter, pricing increased 0.4 percentage points and the volume/mix fell 1.5 percentage points.International Developed Markets: Net sales of $843 million were up 3.2% year over year. Organic sales declined 0.1%, with pricing up 0.2 percentage points and volume/mix dipping 0.3 percentage points. We expected a 3.6% decline in segment organic sales. Emerging Markets: Net sales of $746 million were up 7.6% year over year. Organic sales grew 3.8%. We expected 2.2% growth in segment organic sales. Pricing was up 4.4 percentage points, but volume/mix declined 0.6 percentage points.Kraft Heinz: Other Financial AspectsKraft Heinz ended the quarter with cash and cash equivalents of $3,308 million, long-term debt of $19,223 million and total shareholders’ equity (excluding noncontrolling interest) of $41,923 million. Net cash provided by operating activities was $1,006 million for the three months ended March 28, 2026, and free cash flow was $766 million.The company returned $474 million to its shareholders through cash dividends in the first quarter. Kraft Heinz did not repurchase any shares under its existing buyback program. As of March 28, 2026, KHC had approximately $1.5 billion remaining under its authorized repurchase capacity.What to Expect From KHC in 2026?For 2026, Kraft Heinz still expects organic net sales to decline 1.5% to 3.5% year over year, indicating an estimated 100 bps impact from incremental SNAP-related headwinds.Constant currency adjusted operating income is projected to decline 14% to 18%. Adjusted gross profit margin is expected to decrease 25-75 bps compared with the prior year.The company anticipates adjusted EPS to be between $1.98 and $2.10.Shares of this Zacks Rank #3 (Hold) company have fell 8.3% in the past three months compared with the industry’s decline of 10.7%.Image Source: Zacks Investment ResearchStocks to ConsiderPost Holdings, Inc. POST operates as a consumer-packaged goods holding company in the United States and internationally. At present, POST holds a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The consensus estimate for Post Holdings’ current fiscal-year sales and earnings implies growth of 2.7% and 0.1%, respectively, from the year-ago figures. Post Holdings delivered a trailing four-quarter earnings surprise of 19.6%, on average.Smithfield Foods, Inc. SFD produces packaged meats and fresh pork in the United States and internationally. It carries a Zacks Rank #2 at present. Smithfield Foods delivered a trailing four-quarter earnings surprise of 12%, on average. The Zacks Consensus Estimate for Smithfield Foods’ current fiscal-year sales and earnings indicates growth of 1.3% and 7.5%, respectively, from the prior-year levels.Darling Ingredients Inc. DAR develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients. It currently has a Zacks Rank #2. DAR delivered a trailing four-quarter earnings surprise of 16.1%, on average.The Zacks Consensus Estimate for Darling Ingredients’ current fiscal-year sales indicates growth of 8.1%, from the prior-year reported levels.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks