Price to Operating Profit (P/OP)
since 2015
Calculation
Kraft Heinz Co., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income (loss)1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 14, 2020 | 10.69 | = | 26.88 | ÷ | 2.51 | 2.51 | = | 3,070 | ÷ | 1,221,399,549 | |
| Jun 7, 2019 | — | = | 28.74 | ÷ | -8.38 | -8.38 | = | -10,220 | ÷ | 1,219,938,804 | |
| Feb 16, 2018 | 12.74 | = | 70.80 | ÷ | 5.56 | 5.56 | = | 6,773 | ÷ | 1,218,801,890 | |
| Feb 23, 2017 | 18.42 | = | 92.94 | ÷ | 5.05 | 5.05 | = | 6,142 | ÷ | 1,217,136,057 | |
| Mar 3, 2016 | 35.63 | = | 77.37 | ÷ | 2.17 | 2.17 | = | 2,639 | ÷ | 1,215,189,526 |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Kraft Heinz Co. Annual Report.
The financial metrics from March 2016 to February 2020 indicate a significant compression in valuation multiples and a period of extreme volatility in operating performance. The Price to Operating Profit (P/OP) ratio exhibits a consistent downward trajectory over the analyzed period, reflecting a decrease in the premium the market is willing to pay relative to operating earnings.
- Share Price Evolution
- The share price experienced an initial increase, peaking at US$ 92.94 in February 2017, before entering a period of sustained decline. By February 2020, the price fell to US$ 26.88, representing a substantial reduction in market value from the 2017 peak.
- Operating Profit per Share Performance
- Operating profit per share showed growth from US$ 2.17 in March 2016 to US$ 5.56 in February 2018. This trend was sharply reversed in June 2019, when the figure dropped to a negative US$ 8.38. A partial recovery occurred by February 2020, with operating profit per share returning to a positive US$ 2.51.
- P/OP Ratio Analysis
- The P/OP ratio declined steadily from 35.63 in March 2016 to 12.74 in February 2018. The ratio was not applicable for June 2019 due to the negative operating profit per share. By February 2020, the ratio reached its lowest point in the series at 10.69, indicating a significant contraction in valuation relative to operating profitability over the five-year span.
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Comparison to Competitors
Kraft Heinz Co., P/OP, long-term trends, comparison to competitors
| Kraft Heinz Co. | Coca-Cola Co. | Mondelēz International Inc. | PepsiCo Inc. | Philip Morris International Inc. | |
|---|---|---|---|---|---|
| Feb 14, 2020 | 10.69 | 24.95 | 21.87 | 19.78 | 12.92 |
| Jun 7, 2019 | — | 22.54 | 20.45 | 16.10 | 10.48 |
| Feb 16, 2018 | 12.74 | 25.05 | 17.88 | 15.15 | 13.91 |
| Feb 23, 2017 | 18.42 | 20.80 | 26.97 | 15.57 | 14.71 |
| Mar 3, 2016 | 35.63 | 21.91 | 7.02 | 16.77 | 13.31 |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).