Chicago, IL – May 15, 2025 – Today, Zacks Equity Research discusses Mondelez International, Inc. MDLZ, The Kraft Heinz Co. KHC, McCormick & Company, Inc. MKC and Conagra Brands, Inc. CAG.
Industry: Food
Link: https://www.zacks.com/commentary/2470316/4-miscellaneous-food-stocks-to-monitor-in-a-challenging-market
The Zacks Food-Miscellaneous industry is navigating a challenging macroeconomic environment, as inflation continues to strain consumer spending and accelerate the shift toward private-label food alternatives. At the same time, rising input costs and operational expenses are placing added pressure on profit margins across the sector.
In response to these headwinds, food companies are implementing strategic initiatives focused on cost optimization, product innovation and portfolio expansion to include more health-conscious and budget-friendly options. These forward-looking efforts are helping industry players like Mondelez International, Inc., The Kraft Heinz Co., McCormick & Company, Inc. and Conagra Brands, Inc. to adapt to evolving consumer demands.
The Zacks Food-Miscellaneous industry consists of companies that manufacture and sell a wide range of food and packaged food items, such as cereals, flour, sauces, bakery items, spices and condiments, natural and organic food items and frozen products. Some companies also provide comfort food items, such as chocolates and ready-to-serve meals, soups and snacks.
A few players are engaged in providing pet food products and supplements. Several food companies also offer organic and natural products. Companies operating in this space sell their products mainly through wholesalers, distributors, large retail organizations, grocery chains, mass merchandisers, drug stores and e-commerce service providers. Some also cater to foodservice channels, including restaurants, cafes and hotels. Others offer services to schools, hospitals and industry caterers.
Challenging Market Landscape: The food industry is currently grappling with a challenging macroeconomic environment, driven largely by persistent inflation and reduced consumer purchasing power. As a result, more consumers are shifting toward cost-effective food options, favoring private-label products over well-known brands.
At the same time, several companies are experiencing a decline in their foodservice performance, particularly due to slower foot traffic in quick-service restaurants, which is impacting sales in key markets. These economic pressures have led to softened sales volumes across many major food brands. In response to these headwinds, food companies are adapting by focusing on value-driven marketing strategies, launching promotional campaigns, and expanding their range of affordable, budget-friendly food offerings.
Cost Pressure: Rising prices of key ingredients, coupled with increasing labor, packaging and transportation expenses, are straining profit margins. Furthermore, companies are absorbing higher operational costs as they invest in performance improvements, efficiency upgrades and capacity expansions.
While these investments are essential for long-term success, they are contributing to near-term financial challenges. Adding to these challenges, the ongoing global trade tensions and tariffs have further increased input costs, particularly for imported raw materials, putting additional stress on profitability across the food sector.
The elevated costs pose an ongoing challenge to profitability. To counterbalance these pressures, companies are pursuing various cost-control strategies, including streamlining supply chains, optimizing sourcing practices and implementing efficiency measures.
Strengthening Brands and Revamping Portfolio: Established brands continue to provide a competitive edge, fueling strong customer loyalty and supporting business growth. This advantage, combined with a commitment to innovation, has helped companies maintain their market position. As demand for healthier and more nutritious products rises, companies are introducing innovative organic options and expanding their wellness-focused offerings.
Beyond product development, efforts to modernize production capabilities and diversify product portfolios have delivered meaningful results. These initiatives have reinforced market positioning while paving the way for future expansion by ensuring adaptability to shifting consumer preferences and industry trends. The ability to stay aligned with evolving customer demands has become a crucial driver of success.
The Zacks Food-Miscellaneous industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #155, which places it in the bottom 37% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence about this group’s earnings growth potential. Since the beginning of March 2025, the industry’s consensus earnings estimate for the current financial year has declined 3.4%.
Let’s take a look at the industry’s performance and current valuation.
The Zacks Food-Miscellaneous industry has underperformed the S&P 500 and the broader Zacks Consumer Staples sector over the past year.
The industry has declined 14.2% over this period against the S&P 500’s growth of 11.2%. Meanwhile, the broader sector has declined 2.5% in the said time frame.
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing consumer staples stocks, the industry is currently trading at 15.97X compared with the S&P 500’s 21.37X and the sector’s 17.39X.
Over the past five years, the industry has traded as high as 20.75X and as low as 14.47X, with the median being at 17.63X.
Mondelez: This Zacks Rank #2 (Buy) is a globally recognized leader in the confectionery, food, beverage and snack food industry. Mondelez is shaping the future of snacking with a powerful portfolio of iconic global and local brands, including Oreo, Ritz, LU, Clif Bar, and Tate's Bake Shop, as well as beloved chocolate names like Cadbury Dairy Milk, Milka and Toblerone. It continues to demonstrate resilience and sustained growth by focusing on its core snacking categories — chocolate, biscuits, and baked snacks.
Strategic portfolio reshaping, consistent investment in product innovation, and impactful global brand activations are driving MDLZ’s long-term success. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
By enhancing brand appeal, improving operational efficiency, and prioritizing cost management, Mondelez is well-positioned to deliver robust financial performance. In addition, the company is making targeted investments to support healthier snacking choices, aligning with the rising demand for health-conscious and active lifestyles. The Zacks Consensus Estimate for Mondelez’s current financial-year earnings per share (EPS) has risen by 3.8% to $3.01 in the last 30 days. Shares of MDLZ have declined 10.1% in the past year.
Kraft Heinz: This Zacks Rank #3 (Hold) company is one of the largest consumer packaged food and beverage companies in North America. Kraft Heinz is actively fueling its growth strategy through a powerful combination of pricing initiatives, operational efficiencies and continuous innovation.
The company is making strong headway toward its ambitious 2027 goal of unlocking $2.5 billion in gross efficiencies. KHC is increasing strategic investments in value-creating initiatives, evident in its success in narrowing the price gap with private label competitors, enhancing its competitive edge while reinforcing consumer value.
At the core of these efforts is Kraft Heinz’s Brand Growth System — a data-driven, structured framework that identifies high-potential opportunities, guides smart investments, and prioritizes future initiatives. The Zacks Consensus Estimate for KHC’s current financial-year EPS has moved down by a penny to $2.57 in the past seven days. Shares of Kraft Heinz have declined 23.1% in the past year.
McCormick: The company stands as a global leader in flavor, specializing in the manufacturing, marketing, and distribution of herbs, spices, seasonings, condiments, and flavor solutions. This Zacks Rank #3 company’s strategic focus on innovation and expanding distribution continues to deliver strong results, reinforcing its leadership across key markets and core product categories.
By leveraging growth drivers such as brand marketing, product and packaging innovation, category management and proprietary technology, McCormick is strengthening its competitive edge. The company’s ability to generate growth through increased volume — rather than relying solely on pricing — highlights the enduring strength and appeal of its diverse brand portfolio.
McCormick’s Comprehensive Continuous Improvement (CCI) program remains a critical engine for driving strategic investments and enhancing operating margins. The Zacks Consensus Estimate for MKC’s current financial-year EPS has remained unchanged at $3.05 in the past 30 days. Shares of McCormick have declined 10.1% in the past year.
Conagra: This consumer-packaged goods food company, offering premium edible products, carries a Zacks Rank #3. Conagra continues to drive growth by capitalizing on its strong brand portfolio, strategic acquisitions, and product innovation, especially in high-growth categories like snacks and frozen foods.
The company’s focus on portfolio reshaping, including the integration of differentiated and value-added offerings, underscores its commitment to long-term margin expansion and market relevance. Strong consumer demand — particularly in frozen meals and permissible snacking options — further supports the company’s upward growth trajectory.
The Zacks Consensus Estimate for CAG’s current financial-year EPS has remained unchanged at $2.34 in the past 30 days. Shares of Conagra have declined 25% in the past year.
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Conagra Brands (CAG) : Free Stock Analysis Report
McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
Kraft Heinz Company (KHC) : Free Stock Analysis Report
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