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Kraft Heinz, Comcast, Kellogg report third quarter earnings

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Yahoo Finance's Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss the latest quarterly earnings reports from Kraft Heinz, Comcast and Kellogg.

Video Transcript

ALEXIS CHRISTOFOROUS: Just call it the Super Bowl of earnings season because we have got more than 70 companies in the S&P 500 reporting earnings today alone. Among them those big tech names, right, all the FANG stocks. They're going to be out after the closing bell-- nearly all of the FANG stocks I should say.

I want to bring in Yahoo Finance's Emily McCormick now to break down some of the reports that were out this morning. So, Emily, let's start with Kraft Heinz, been struggling there for a while. This consumer giant posting a slight beat on both the top and bottom line. What stood out to you?

EMILY MCCORMICK: Well, Alexis, taking a look at Kraft Heinz's third-quarter results, that company posting better-than-expected results on the top and bottom line as you mentioned, and also raising its guidance. So this company really being fueled here by that surge in demand for its products given that most consumers are still dining primarily at home rather than going out to restaurants during the pandemic.

So to break down those numbers, we had adjusted earnings coming in at $0.70 a share on net sales of $6.44 billion. That top line rose 6% year over year. Then taking a look at that organic revenue, that was up 6.3% in the third quarter after dropping by more than 1% in the same period last year, so Kraft Heinz actually increasing its sales and its revenue during the pandemic period.

Now the company also raising its full-year outlook. It now sees mid-single digit 2020 organic net sales growth and high-single digit 2020 adjusted EBITDA growth, so again, getting a boost, particularly in its home market if we take a look at that geographic breakdown. And we do have that stock, which had been down about 9% for the year to date through yesterday's close, now rising about 2% in early trading, Alexis.

ALEXIS CHRISTOFOROUS: Let's move over to media now, and Comcast out with earnings. And it was able to beat despite park closures and movie theaters being shut down.

EMILY MCCORMICK: That's right, Alexis. Comcast really beating here on the back of a record gain that it saw in high-speed-internet customer additions, those coming in at 633,000 new additions during the quarter for a 67% increase over last year. That was also well above the 527,000 adds that had been expected. Now we also saw third-quarter adjusted earnings, as well as revenue of $25.5 billion better than expected and that top line growing 5% over last year-- or actually, excuse me, dropping by 5% over last year, but still better than expected.

Now theme parks were the weak point here for Comcast during the quarter, similar to what we've seen with Disney. Amusement parks and closures and attendance caps drove revenue down 81% during the third quarter in that business unit. But again, overall a beat here for Comcast in the third quarter.

BRIAN SOZZI: And, Emily, a little later on I'm catching up with Kellogg CEO Steve Cahillane, and one of the questions I think I have to ask him, why are you out this morning raising your guidance?

EMILY MCCORMICK: Well, taking a look here at Kellogg raising its guidance because the COVID-19 pandemic continues to drive that surge, again like we saw with Kraft Heinz, with that demand for pantry loading and for dining at home as opposed to going out to restaurants. We saw here, just taking a look at actual products, organic sales grew for cereal, snacks, and frozen foods in North America, so again, all of those products that tend to be eaten primarily at home.

Now we saw the company again raising its guidance, as you mentioned. The company expects organic net sales growth to come at a 6% this year. That's a full percentage point ahead of its previous guidance from the summer. The company also expects to grow operating profit by 2% over last year versus previous guidance for a decline of 1%. Now the company did mention that the pandemic continued to drive demand throughout the third quarter, albeit at a moderating pace from the second quarter. So looking into the fourth quarter and beyond, it will be important to see if Kellogg is able to continue this momentum, Alexis and Brian.

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