As the Covid-19 pandemic continues to wreak havoc on the market, consumer defensive stocks have generally fared better than others sectors due to increased demand for staple goods like toilet paper and canned food.
On Friday, the major indexes ended the day higher, but were lower for the week. The Dow Jones Industrial Average closed at 23,775.27, gaining 1.11%. The S&P 500 closed at 2,836.74 for a gain of 1.39% and the Nasdaq Composite closed at 8,634.52, rising 1.65%.
The GuruFocus All-in-One Screener, a Premium feature, found several consumer packaged goods companies have bucked the trend of the overall market over the past month as of April 24, including The Kraft Heinz Co. (KHC, Financial), McCormick & Co. Inc. (MKC, Financial), Conagra Brands Inc. (CAG, Financial), General Mills Inc. (GIS, Financial) and Kimberly-Clark Corp. (KMB, Financial), among others.
Kraft Heinz
Having gained approximately 37.36% over the past month, Kraft Heinz, which has a $35.21 billion market cap, was trading around $28.80 on Friday with a price-earnings ratio of 18.13, a price-book ratio of 0.68 and a price-sales ratio of 1.42.
The Chicago-based company, which is known for Heinz Ketchup and Kraft products like macaroni and cheese, has a GuruFocus financial strength rating of 4 out of 10 on the back of low interest coverage. In addition, the Altman Z-Score of 0.76 warns Kraft Heinz could be at risk of going bankrupt. Additionally, the company may not be capital efficient since its weighted average cost of capital is greater than its return on invested capital.
Kraft Heinz’s profitability fared much better, scoring a 7 out of 10 rating, driven by an expanding operating margin and a moderate Piotroski F-Score of 5, which indicates business conditions are stable. The company has recorded a decline in revenue per share over the past five years.
Of the gurus invested in Kraft Heinz, Warren Buffett (Trades, Portfolio) has the largest stake with 26.62% of outstanding shares. Other top guru shareholders include First Eagle Investment (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Joel Greenblatt (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Mark Hillman (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jeff Auxier (Trades, Portfolio).
McCormick
Posting a one-month return of 33.74%, McCormick, which has a market cap of $20.38 billion, was trading around $153.94 on Friday with a price-earnings ratio of 29.39, a price-book ratio of 5.77 and a price-sales ratio of 3.86.
Known for its spices, the Baltimore-based company has a GuruFocus financial strength rating of 4 out of 10. Although the company has issued approximately $2.6 billion in new long-term debt over the past three years, it is still at a manageable level due to having adequate interest coverage. The Altman Z-Score of 2.79, however, suggests it is under some financial pressure since its assets are building up at a faster rate than its revenue is growing.
McCormick also has a 9 out of 10 profitability rank, driven by an expanding operating margin, a high Piotroski F-Score of 7, implying business conditions are healthy, and strong returns that outperform a majority of competitors. Despite recording a slowdown in revenue per share growth over the past 12 months, the company has a business predictability rank of four out of five stars. According to GuruFocus, companies with this rank typically return an average of 9.8% per annum over a 10-year period.
With 0.19% of outstanding shares, Pioneer is the company’s largest guru shareholder. Lee Ainslie (Trades, Portfolio), Greenblatt, Laffont, Gabelli and Mairs and Power (Trades, Portfolio) also have positions in the stock.
Conagra Brands
Having climbed 31.91% over the past month, Conagra Brands, which has a $16.56 billion market cap, was trading around $34.15 on Friday with a price-earnings ratio of 21.65, a price-book ratio of 2.12 and a price-sales ratio of 1.58.
The packaged foods company headquartered in Chicago, which is known for the Healthy Choice, Marie Callendar’s and Chef Boyardee brands, has a GuruFocus financial strength rating of 4 out of 10. In addition to being weighed down by approximately $4.2 billion in new long-term debt, Conagra also has poor interest coverage and a low Piotroski F-Score of 1.69.
Conagra Brands’ profitability scored a 6 out of 10 rating, driven by an expanding operating margin, returns that outperform over half of its industry peers and a moderate Piotroski F-Score of 4. Although its revenue per share has been in decline for the past five years, it has a one-star business predictability rank. GuruFocus says companies with this rank typically return an average of 1.1% per year.
Jana Partners (Trades, Portfolio) is Conagra’s top guru shareholder with a 2.41% stake. Other top guru investors are the T Rowe Price Equity Income Fund (Trades, Portfolio), Gabelli, Pioneer, Greenblatt, Ainslie, Auxier and Laffont.
General Mills
Up 27.33% from a month ago, General Mills, which has a market cap of $36.43 billion, was trading around $60.4 on Friday with a price-earnings ratio of 17.28, a price-book ratio of 4.86 and a price-sales ratio of 2.21.
The well-known manufacturer of breakfast foods like Cheerios cereal and Pillsbury cinnamon rolls, which is based in Minneapolis, has a GuruFocus financial strength rating of 4 out of 10. Although General Mills has sufficient interest coverage, the Piotroski F-Score of 2.46 indicates it is under some financial pressure.
General Mills’ profitability scored an 8 out of 10 rating, driven by operating margin expansion, strong returns that outperform a majority of competitors and a high Piotroski F-Score of 7. Despite recording consistent earnings and revenue growth, the company’s 2.5-star business predictability rank is on watch. GuruFocus data shows companies with this rating typically return an average of 7.3% per year.
Of the gurus invested in General Mills, Simons’ firm has the largest position with 0.77% of outstanding shares. Other top guru shareholders are Pioneer, Mairs & Power, Gabelli, Greenblatt, Ainslie, Jeremy Grantham (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Hillman, John Hussman (Trades, Portfolio), Dodge & Cox and Auxier.
Kimberly-Clark
Gaining 24.94% over the course of a month, Kimberly-Clark, which has a $48.19 billion market cap, was trading around $141.75 on Friday with a price-earnings ratio of 20.68 and a price-sales ratio of 2.59.
The Irving,Texas-based company, which produces consumer goods like facial tissue and sanitary paper products, has a GuruFocus financial strength rating of 5 out of 10. Despite issuing approximately $703 million in new long-term debt over the past three years, it is at a manageable level due to adequate interest coverage.
Kimberly-Clark’s profitability fared better, scoring an 8 out of 10 rating as it has an expanding operating margin, a high Piotroski F-Score of 8 and strong margins that outperform a majority of industry peers. It also has a one-star business predictability rank.
The T. Rowe Price Equity Income Fund is the company’s largest guru shareholder with a 0.66% stake. Other top guru investors are Diamond Hill Capital (Trades, Portfolio), Pioneer, Mairs & Power, Greenblatt, Grantham, Fisher, Dodge & Cox and Gabelli.
Disclosure: No positions.
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