H.J. Heinz Earnings Preview

H.J. Heinz

will be reporting its fiscal fourth-quarter 2011 results tomorrow, May 26, before the opening bell. Investors will be watching for updates on recent acquisitions and whether the company's focus on emerging markets will continue to pay off. Analysts are looking for the condiment maker to post earnings of $0.72 per share on revenues of $2.9 billion. That is up from $0.66 per share and $2.7 billion in the same period of last year. The consensus earnings estimate is unchanged from 60 days ago.

Pittsburgh-based Heinz is one of the world's largest food companies. It dominates the U.S. ketchup market and also produces soups, sauces, frozen foods, infant food and other processed food products. Customers include food retailers, the foodservice industry and the U.S. military and government agencies. During the three months that ended in April, Heinz acquired an 80% stake in Coniexpress SA Industrias Alimenticias, a leading Brazilian manufacturer of Quero condiments and tomato-based sauces. CEO William R. Johnson said, “We expect the Quero business to approximately double Heinz's sales in Latin America in the first full year.”

For the full year, analysts expect to see earnings up 7.1% year-over-year to $3.09 per share and marginal growth in revenues to $10.7 billion. Note that analysts have underestimated Heinz's earnings in the past ten quarters. Also, competitors Campbell Soup

and ConAgra

beat EPS expectations in their recent third-quarter reports.

Heinz has a dividend yield of 3.4% and a return on equity of 53.5%. The consensus recommendation of analysts is to buy HNZ, and it has been for more than 90 days. After rising about 8% year to date, shares are trading near the 52-week high of $54.21. The stock performance is in line with the broader markets since the beginning of the year, and it has outperformed competitors Campbell Soup and ConAgra over the past year.