How will KHC's Q1 2025 earnings forecast impact investors?

Kraft Heinz's (KHC) Q1 2025 earnings forecast is expected to show a decline in EPS and revenue compared to the same period last year, which could impact investor sentiment and market performance.

1. **Expected Decline in EPS and Revenue**: Analysts anticipate that Kraft Heinz will report earnings per share (EPS) of $0.60 for Q1 2025, reflecting a 13.04% year-over-year decline. Additionally, the estimated revenue for the quarter is $6.26 billion, indicating a 6.49% decrease from the previous year's same quarter. This decline in both EPS and revenue is a bearish indicator for the company's financial performance in the immediate term.

2. **Sales and Margin Concerns**: Citi's downgrade of Kraft Heinz to Sell ahead of Q1 2025 earnings highlights risks to organic sales growth and potential margin pressures. The bank expects organic sales to decline 4.8% in the first quarter, which is below the visible consensus estimate of a 4.0% decline. Earnings per share are projected to be $0.61, in line with consensus, but the company has faced sales pressure across various channels and geographies. This continued weakness in sales could pressure earnings further.
3. **Investor Sentiment and Market Performance**: The stock's performance has been lackluster, with Kraft Heinz experiencing share losses across key product categories and facing challenges in measured takeaway growth. The stock has underperformed the S&P 500 in several trading sessions, indicating broader market concerns. Investors will be closely monitoring the earnings report for signs of improvement or further declines in sales and margins.
4. **Dividend Yield**: Despite the negative outlook, Kraft Heinz has a dividend yield of 5%, which could be attractive to income-focused investors. However, the potential for dividend cuts or adjustments to fund declining earnings and revenue is a risk to consider.

In conclusion, Kraft Heinz's Q1 2025 earnings forecast suggests a challenging period for the company, with expected declines in both EPS and revenue. Investors should weigh the potential for dividend income against the risks of further declines in sales and margins, as well as the possibility of a dividend cut. The upcoming earnings report will be crucial in determining the extent of these risks and the company's future prospects.