Why Kraft Heinz Stock Is Higher Today (Despite Missing Sales Estimates)

Shares of food giant Kraft Heinz (NASDAQ: KHC) are up 4.4% as of 11:17 a.m. ET today, according to numbers from S&P Global Market Intelligence , even though the organization's second-quarter revenue fell short of expectations. Investors are impressed with the company's profitability, and hopeful that it will continue to improve as a result of efficiency-oriented initiatives.

Slowing sales is no problem for profitability

For the three-month stretch ending in late June, food company Kraft Heinz turned a little less than $6.5 billion in revenue into adjusted operating income of just under $1.4 billion (or $0.78 per share). Both the top- and bottom lines were down slightly year over year, and sales fell short of analysts' expectations of $6.55 billion. But beating earnings estimates of $0.74 per share was enough to convince the bulls to jump on board.

See, a key part of Kraft Heinz's turnaround plan is becoming more cost-efficient. These efforts aren't yet complete, however. As CEO Carlos Abrams-Rivera explained of the company's Q2 results and revised guidance, "While we are now expecting a more gradual top-line improvement in the back half of the year, we continue to unlock efficiencies that are allowing us to make accretive investments in our brands, grow profits, and drive future sales growth."

Granted, that sales growth isn't taking shape quite as soon as recently hoped. Kraft Heinz dialed back its full-year revenue guidance from growth of between nil and 2% to a decline of as much as 2%, and no better than even with last year's levels.

Even so, its previously suggested 2024 earnings guidance of between $3.01 and $3.07 per-share (implying improvement of between 1% and 3%) remains in place, suggesting Kraft Heinz is indeed culling costs without crimping its ability to conduct business.

Kraft Heinz stock still has room to run

Wednesday's sizable gain obviously makes this stock slightly less attractive to buy into now, simply because it's that much more expensive.

In this instance, however, investors may want to go ahead and take the plunge anyway. Shares are still below their April high, and still more than 60% below their 2017 peak, when it became clear the 2015 merger of Kraft and Heinz wasn't working nearly as well as initially hoped.

Now it is. The company's second-quarter numbers and the stock's subsequent gain should help highlight the fact that the turnaround effort is finally taking hold. More important to interested investors, there's certainly plenty more room for resulting upside ahead.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy .