Kraft Heinz Co. (NASDAQ:KHC)

Return on Assets (ROA)

The ROA showed a rising trend from early 2016, beginning at 1.02%, and progressively increasing to a peak around the fourth quarter of 2017 at approximately 9.15%. This elevated level was maintained through mid-2018. However, a significant decline occurred starting in the last quarter of 2018, with ROA turning negative and reaching lows near -10.75% by the third quarter of 2019. A recovery trend appears in early 2020, with values improving but remaining close to zero by the second quarter of 2020.

Financial Leverage

Financial leverage ratios remained relatively stable over the examined periods, fluctuating slightly around the 2.0 mark. Initially, leverage was slightly above 2.1 in early 2016, gradually decreasing to around 1.82 in late 2017. From late 2018 onward, there was a modest increase back to approximately 2.0, showing no extreme volatility or major structural shifts.

Return on Equity (ROE)

ROE followed a pattern similar to ROA, starting modestly at 2.16% in early 2016 and increasing steadily to a high of around 16.77% in late 2017. Positive momentum persisted through mid-2018 but then sharply reversed with negative returns beginning in the final quarter of 2018, reaching a trough near -21.53% by the third quarter of 2019. Early 2020 indicates a partial recovery, with ROE moving back toward zero but remaining slightly negative by mid-2020.

Summary

The data indicates a period of improving profitability from 2016 through late 2017, followed by a marked decline into negative returns for both asset and equity performance starting in late 2018 through most of 2019. The stability of financial leverage suggests that changes in returns were more likely driven by operational or market factors rather than shifts in capital structure. A tentative recovery trend is observable in early 2020, though profitability metrics had not fully normalized by the end of the reported period.

Net Profit Margin

The net profit margin demonstrates a generally positive trend from April 2016 through September 2017, increasing from 5.59% to 15.03%. A sharp spike is observed in December 2017, reaching 41.93%, and maintaining elevated levels into September 2018. However, starting from December 2018, there is a pronounced decline, dropping into negative territory and reaching its lowest point at -43.27% in September 2019. This negative performance persists until the end of 2019. There is a recovery beginning in the first quarter of 2020 with values returning to a positive but modest level around 7.5%, before dipping slightly negative again in mid-2020.

Asset Turnover

The asset turnover ratio remains relatively stable over the entire period, fluctuating narrowly between 0.18 and 0.26. From April 2016 to June 2020, the ratio mostly hovers around 0.22 to 0.25, indicating consistent efficiency in asset utilization. A slight upward trend is visible in late 2018 onward, with the ratio reaching 0.26 by June 2020, suggesting a mild improvement in the ability to generate sales per unit of assets.

Financial Leverage

Financial leverage demonstrates minor fluctuations, remaining within a narrow range between approximately 1.82 and 2.12. The lowest leverage levels occur during late 2017 and 2018, around 1.82 to 1.86, indicating a reduction in reliance on debt during that time. Leverage then rises again toward 2.0 by mid-2020, which may reflect increased use of debt or equity financing in recent periods. Overall, leverage appears moderate and fairly stable.

Return on Equity (ROE)

The ROE follows a pattern similar to net profit margin. It improves steadily from 2.16% in April 2016 to a peak of 16.77% in July 2018. From December 2018 onward, ROE declines sharply, turning significantly negative and reaching its nadir at -21.53% in September 2019. This indicates a period of substantial losses or diminished returns on shareholders' equity. In early 2020, ROE begins to recover, reaching positive but low levels around 3.7%, before slipping slightly negative in mid-2020. The movements in ROE are consistent with the swings seen in net profit margin, tempered by changes in asset turnover and leverage.

Summary of Trends

Overall, the company experienced strong profitability improvements through 2017 and early 2018, with significant gains in net profit margin and ROE. This period of high profitability coincided with stable asset turnover and moderate financial leverage. However, from late 2018 to late 2019, profitability deteriorated sharply, resulting in negative margins and returns, despite relative stability in asset turnover and leverage. By 2020, there are signs of recovery, with profitability metrics improving but remaining below earlier peaks. The consistent asset turnover suggests stable operational efficiency, while fluctuations in leverage are moderate, indicating that financial structure changes played a lesser role in the volatility of profitability compared to operational performance.

The financial data indicates notable fluctuations in key profitability and efficiency metrics over the observed periods. Several trends can be identified based on the provided ratios and margins.

Tax Burden

Initially stable around 0.65 to 0.73 until early 2017, the tax burden ratio experienced a significant spike in late 2017 and early 2018, reaching values near 2.00 to 2.31, which is unusually high. There is a lack of data around mid-2018 to late 2019, after which the ratio normalizes close to the initial range, before turning negative at the last reported point, indicating considerable volatility and potentially unusual tax-related items or adjustments.

Interest Burden

This ratio demonstrates relative stability, maintaining values around 0.58 to 0.82 from 2016 through 2018. A decrease to approximately 0.66 is observed in 2020, followed by a significant drop to 0.18 in the last period, suggesting a substantial reduction in operating profits relative to earnings before interest and taxes, or increased interest expenses.

EBIT Margin

A clear upward trend is observed from approximately 14.7% in early 2016 to nearly 26% in late 2017 and early 2018, indicating improving operational profitability. However, a dramatic decline occurs afterward, with margins turning deeply negative (around -38% to -43%) from late 2018 through 2019, before partially recovering to positive levels around 7%-16% by mid-2020. This sharp decline and partial rebound suggest the impact of exceptional losses or impairments followed by operational recovery.

Asset Turnover

This metric remains relatively consistent, fluctuating narrowly between 0.18 and 0.26 across all periods. The stability implies consistent efficiency in asset utilization to generate revenues despite variations in profitability.

Financial Leverage

Leverage ratios generally decreased from above 2.1 in 2016 to a low near 1.82 in late 2017 and early 2018, suggesting some deleveraging or asset growth relative to equity. It then increases slightly back towards 2.0 by mid-2020. These moderate fluctuations reflect controlled changes in the company’s capital structure.

Return on Equity (ROE)

The ROE follows a pattern similar to EBIT margin, starting low near 2% in early 2016 before rising to over 16% in late 2017 and early 2018. A subsequent sharp drop into deeply negative territory (-20% approximately) occurs between late 2018 and late 2019, followed by a return to low positive percentages around 3.7% and finally a slight negative value at the last observation. These swings indicate large impacts on net profitability affecting shareholders’ returns, likely tied to the negative EBIT margin period.

In summary, the financial data reveals a period of improving operational performance and returns through early 2018, followed by a pronounced deterioration marked by substantial negative EBIT margins and ROE losses through 2019. Efficiency and leverage remain more stable, though leverage shows modest deleveraging followed by a slight increase. The tax and interest burdens reflect irregularities and volatility, with some extraordinary changes during the downturn. The partial recovery in margins and returns by mid-2020 suggests efforts or circumstances leading to operational improvement after a significant financial distress period.

The analysis of key profitability and efficiency metrics reveals distinct trends and fluctuations over the observed periods.

Net Profit Margin

The net profit margin generally experienced growth from the early periods, starting at 5.59% and rising steadily to a significant peak at 41.93% by the end of 2017. This elevated level was maintained through the first half of 2018. However, a drastic deterioration occurred subsequently, with margins turning sharply negative from late 2018 through 2019. The margin reached lows around -43% during this period. In early 2020, the margin partially recovered to positive single digits before declining slightly again.

Asset Turnover

Asset turnover remained relatively stable throughout the periods, fluctuating narrowly between 0.18 and 0.26. The ratio showed minor incremental improvements, particularly from late 2018 onward, increasing from 0.22 to 0.26 by mid-2020. This trend suggests a consistent but modest improvement in the efficiency with which assets are used to generate revenue.

Return on Assets (ROA)

ROA exhibited a pattern similar to net profit margin, with an initial gradual increase from around 1% to over 9% by the end of 2017. This was followed by a steep decline into negative territory, reaching approximately -10.75% during 2019. In the initial part of 2020, ROA showed some recovery, nearing positive territory, but ended slightly negative.

Overall, the company demonstrated strong profitability and asset utilization up to the end of 2017, followed by a pronounced downturn in profitability measures through 2019, despite relatively stable asset turnover ratios. The recovery signs in early 2020 indicate potential stabilization, although profitability remains subdued. The divergence between stable asset turnover and fluctuating profitability metrics may indicate increased costs, impairments, or other factors negatively impacting net income and asset returns during the downturn period.

The financial analysis over the examined periods reveals several notable trends in profitability, efficiency, and financial burdens.

Tax Burden

The tax burden ratio remained relatively stable between 0.65 and 0.74 over most periods but experienced significant spikes in the last quarters of 2017 and 2018, showing values around 2. This anomaly was followed by a return to previous levels before dropping to a negative value in the latest period, indicating possible tax refunds, credits, or adjustments impacting the taxable income.

Interest Burden

The interest burden ratio generally improved, starting at 0.58 and increasing to the range of 0.8 to 0.82 from late 2016 through mid-2018. The ratio declined somewhat in recent quarters, reaching as low as 0.18, which may reflect changes in interest expenses relative to earnings, possibly indicating decreased debt levels or improved interest cost management.

EBIT Margin

The EBIT margin exhibited a steady upward trend from 14.68% in early 2016, peaking near 25.97% by early 2018, reflecting improving operational profitability. However, starting from late 2018, there was a dramatic decline with negative margins reaching beyond -40%, indicating significant operational challenges or one-time losses. A partial recovery was observed by mid-2020, with margins returning to positive but much lower levels around 7.09%.

Asset Turnover

The asset turnover ratio remained stable, fluctuating narrowly between 0.18 and 0.26 throughout the period. This stability suggests consistent efficiency in asset utilization for generating sales over time without significant improvement or deterioration.

Return on Assets (ROA)

ROA trends mirrored the EBIT margin pattern, starting modestly at around 1%, improving to over 9% in 2017, indicating strong asset profitability. There was a sharp reversal in late 2018 with negative ROA figures close to -10%, consistent with severe profitability pressures. The metric improved again toward mid-2020 but remained close to zero or slightly negative, reflecting continued challenges in asset income generation.

Overall, the data reflects a period of operational strength and profitability improvement through 2017, followed by a marked deterioration beginning late 2018, impacting both earnings and returns. Despite some recovery signs by 2020, profitability remains constrained. Tax and interest burdens show volatility, with interest expense pressures easing somewhat recently. Asset utilization has remained consistent but without growth.

Tax Burden Ratio

The tax burden ratio shows an overall stable trend in most periods, generally ranging between 0.65 and 0.74. However, there is a significant spike observed in the last quarter of 2017 and the first three quarters of 2018, where the ratio sharply rises above 1.9 and peaks at 2.31. This anomaly indicates the possible impact of unusual tax events or adjustments during this time frame. Following this period, the tax burden returns closer to previous levels but ends with a negative ratio in the second quarter of 2020, suggesting a potential tax credit or benefit.

Interest Burden Ratio

The interest burden ratio remains relatively consistent over the analyzed periods, fluctuating mostly between 0.58 and 0.82. The ratio reflects a stable capacity to cover interest expenses through operating income. Notably, there is a slight decline noted from mid-2019 onward, bringing the ratio down to as low as 0.18 by the second quarter of 2020. This reduction could imply an increased interest expense burden or lower operating income relative to interest in that latest period.

EBIT Margin

There is a clear upward trajectory in EBIT margin from early 2016 through 2017, improving from 14.68% to a peak above 25% by the end of 2017. This positive momentum stabilizes somewhat in early 2018 but then dramatically reverses in the last quarter of 2018 and throughout 2019, plunging into negative territory, with margins between -38% and -43%. This sharp deterioration reflects significant operational difficulties or extraordinary losses. The margin rebounds partially in early 2020, recovering to above 7%, which may indicate initial signs of operational recovery.

Net Profit Margin

The net profit margin closely follows the pattern seen in EBIT margin. Starting at 5.59% in early 2016, it rises steadily to exceed 41% by late 2017 and early 2018, which is exceptionally high and may reflect unusual income items or adjustments. Subsequent quarters through 2019 show a severe decline into negative margins approximately between -38% and -43%, consistent with major profit erosion. The margin returns to modest positive levels around 7.5% by mid-2020, aligning with early improvement trends observed in EBIT margin.