Heinz (HNZ) Shares Could Thaw Out with Frozen Foods Divestiture - Cramer
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Heinz (NYSE: HNZ) is trading stronger Tuesday following a positive mention from stock swami Jim Cramer late Monday night.
Cramer said that Heinz should follow peer Kraft (NYSE: KFT) in a split of its company to unlock potential shareholder value. He noted that there is a lot to like about Heinz with its defensive products and 3.7 percent dividend yield. (We're particular fans of Salad Cream, though we're curious as to which part of the salad this product comes from.)
However, Heinz lowered its long-term outlook with its fourth-quarter 2012 report on May 24th, citing frozen food weakness, investors took a little off the table.
So, Cramer thinks Heinz should spin-of or sell the unit. Heinz, for its part, isn't showing signs of any such moves, which Cramer finds to be curious. In the past, Heinz would make similar moves with units larger than the frozen foods division, aiming to unlock further baked-in value. Frozen foods only accounts for 15 percent of total sales, at last check. In offing the unit, Heinz would then be able to focus more on its domestic and emerging markets businesses.
Since announcing it would split the company, Kraft shares have risen 16 percent, something Heinz investors hope will come to them soon.
If Heinz management isn't frozen in their tracks, that is.
Heinz shares are in positive territory. The stock has moved 3.6 percent higher in 2012 and 7.4 percent over the same period last year.
Cramer said that Heinz should follow peer Kraft (NYSE: KFT) in a split of its company to unlock potential shareholder value. He noted that there is a lot to like about Heinz with its defensive products and 3.7 percent dividend yield. (We're particular fans of Salad Cream, though we're curious as to which part of the salad this product comes from.)
However, Heinz lowered its long-term outlook with its fourth-quarter 2012 report on May 24th, citing frozen food weakness, investors took a little off the table.
So, Cramer thinks Heinz should spin-of or sell the unit. Heinz, for its part, isn't showing signs of any such moves, which Cramer finds to be curious. In the past, Heinz would make similar moves with units larger than the frozen foods division, aiming to unlock further baked-in value. Frozen foods only accounts for 15 percent of total sales, at last check. In offing the unit, Heinz would then be able to focus more on its domestic and emerging markets businesses.
Since announcing it would split the company, Kraft shares have risen 16 percent, something Heinz investors hope will come to them soon.
If Heinz management isn't frozen in their tracks, that is.
Heinz shares are in positive territory. The stock has moved 3.6 percent higher in 2012 and 7.4 percent over the same period last year.
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