David Peltier
H.J. Heinz(HNZ Quote - Cramer on HNZ - Stock Picks) issued blowout fiscal first-quarter (ended July) guidance at its annual investor meeting Tuesday, giving investors reason to celebrate.
The company said it now expects to earn 62 to 63 cents a share for the quarter, compared with the previous consensus analyst estimate of 55 cents. Heinz will report its full quarterly results Aug. 24. Despite gaining about 3% in Tuesday trading, closing at $43.98, Heinz shares remain down more than 2% since the beginning of the year. With that in mind, I'm here to answer readers' questions: Should you buy shares in Heinz? Will it be a one-hit wonder, or does the stock still have further upside potential? Management attributed the upside this past quarter to some 100 new products launched over the past 12 months, backed by a 25% increase in marketing spending. Further product innovation is expected in the coming quarters, with Heinz slated to introduce a total of 200 new products in fiscal 2008 (ending April). Organic revenue (excluding acquisitions) improved 5% year over year, driven by double-digit sales growth in the core ketchup business, as well as the company's soups and beans products. In addition to those products, Heinz owns dozens of food brands, including Ore-Ida potatoes and Weight Watchers foods. Heinz's fiscal 2008 guidance is for 14% annual operating income growth on 9% higher overall revenue. The company also stands to benefit from a weak dollar with about 52% of its sales generated overseas. As a result, management said that full-year earnings would come in at the high end of its previous guidance of $2.54 to $2.60.
RSS
