Kraft Heinz
KHC
$25.67
+1.22%
The Kraft Heinz Company is a global food and beverage giant, formed by the 2015 merger of Kraft and Heinz, producing iconic brands like Oscar Mayer, Velveeta, and Philadelphia across the packaged foods industry. As one of North America's largest food manufacturers, it holds a dominant position in retail (85% of sales) and a growing foodservice presence, with products sold in over 190 countries. The current investor narrative centers on a turnaround story under new Berkshire Hathaway leadership, with recent strategic reversals and cost initiatives aimed at reviving growth after years of underperformance, though concerns persist about margin recovery and competitive pressures in a challenging consumer environment.…
KHC
Kraft Heinz
$25.67
Related headlines
KHC 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Kraft Heinz's 12-month outlook, with a consensus price target around $24.21 and implied upside of -5.7% versus the current price.
Average Target
$24.21
0 analysts
Implied Upside
-5.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$19 - $40
Analyst target range
KHC is covered by 17 analysts, with a consensus recommendation of 'hold' (mean rating 3.1 on a 1-5 scale where 1 is strong buy). The average target price is $24.21, implying a 5.7% downside from the current price of $25.67. The distribution leans neutral: no strong buy consensus, with recent ratings from firms like Wells Fargo (Equal Weight), Piper Sandler (Neutral), and JP Morgan (Underweight). The sentiment is cautious, reflecting the uncertain turnaround outlook.
The target range spans from a low of $19.00 to a high of $40.00, a wide spread of $21.00, indicating high uncertainty among analysts. The low target of $19.00 assumes continued margin compression, competitive losses, or a recessionary impact, while the high target of $40.00 implies a successful turnaround with multiple expansion and accelerating growth. Recent rating actions show no upgrades; Bernstein downgraded to Underperform in June 2026, and JP Morgan remains Underweight. The wide dispersion and lack of upgrades suggest low conviction in the near-term outlook, and the stock may remain range-bound until clearer signs of fundamental improvement emerge.
Bulls vs Bears: KHC Investment Factors
KHC presents a classic value vs. value trap debate. On the bull side, the stock offers a compelling valuation (P/S 1.15x, P/B 0.69x), strong free cash flow ($3.945B TTM), a high dividend yield (6.6%), and improving technical momentum. On the bear side, revenue growth is stagnant (0.8% YoY), profitability is erratic due to impairments, analyst consensus is hold with a target implying downside, and the potential Berkshire stake sale creates uncertainty. The single most important tension is whether the strategic reversal under new leadership can reignite organic growth and margin expansion, or whether the company remains a low-growth cash cow facing competitive pressures. Currently, the bear case has slightly stronger evidence given the lack of fundamental improvement, but the low valuation provides a floor.
Bullish
- Strong Free Cash Flow Generation: KHC generated $3.945 billion in TTM free cash flow, providing ample coverage for its $474 million quarterly dividend (59.4% payout ratio in Q1 2026). This cash flow strength supports the 6.6% dividend yield and provides a margin of safety for value investors.
- Low Valuation vs. Peers and History: The current P/S ratio of 1.15x is a 23% discount to the packaged foods industry average of ~1.5x, and the P/B ratio of 0.69x is near historical lows (range 0.6x-1.0x). The forward P/E of 12.2x is well below the industry average of ~18x, suggesting the market is pricing in pessimistic expectations that could expand on positive catalysts.
- Recent Strategic Reversal Under New Leadership: New Berkshire CEO Greg Abel's active engagement with KHC has led to a strategic reversal, signaling a positive shift in oversight. This includes cost initiatives and a focus on reviving growth after years of underperformance, as highlighted in recent news.
- Improving Short-Term Momentum: The stock has rallied 11.9% in the past month and 17.0% in the past three months, significantly outperforming the S&P 500's gains of 0.78% and 3.5%, respectively. The relative strength of +11.1% over one month indicates a potential trend reversal from the negative 1-year trend.
Bearish
- Stagnant Revenue Growth: Q1 2026 revenue of $6.047 billion was up only 0.8% YoY from $5.999 billion, and trailing four-quarter revenue has ranged from $5.999B to $6.576B, indicating a flat to slightly declining top line. This lack of organic growth is a key concern in a competitive packaged foods market.
- Erratic Profitability and Negative Trailing EPS: A $9.266 billion impairment in Q2 2025 caused a net loss of -$7.824 billion, resulting in trailing EPS of -$0.20. While normalized earnings are positive, the volatility and large write-downs highlight the risk of further impairments and margin pressure.
- Analyst Consensus Hold with Downside to Target: The average analyst target of $24.21 implies a 5.7% downside from the current price of $25.67. With 17 analysts and a mean rating of 3.1 (hold), the consensus is cautious, and recent downgrades from Bernstein and JP Morgan suggest low conviction in the turnaround.
- Berkshire Hathaway Potential Stake Sale: Recent news indicates Berkshire Hathaway's new CEO may sell its long-struggling KHC investment, signaling a lack of confidence in the turnaround. Such a sale could create overhang and pressure the stock, given Berkshire's significant ownership.
KHC Technical Analysis
KHC is in a recovery uptrend from a deep downtrend, with the 1-year price change of -10.8% still negative but the stock has rallied sharply from its 52-week low of $21.04. The current price of $25.67 sits at 64% of the 52-week range ($21.04-$29.19), indicating the stock has reclaimed significant ground but remains below the midpoint, suggesting room for further upside if momentum continues. The stock's beta of 0.08 implies minimal correlation with the broader market, making this a defensive, low-volatility name that moves on company-specific factors rather than macro swings.
Short-term momentum is strongly positive: the 1-month price change is +11.9% and the 3-month change is +17.0%, both significantly outpacing the S&P 500's 1-month gain of 0.78% and 3-month gain of 3.5%. This acceleration from the negative 1-year trend signals a potential trend reversal, supported by a relative strength of +11.1% over 1 month versus the S&P. The recent price action shows a series of higher lows since the March 2026 low near $21.21, with volume averaging 13 million shares, suggesting institutional accumulation.
Key support lies at the 52-week low of $21.04, while resistance is at the 52-week high of $29.19. A breakout above $29.19 would confirm a new uptrend and target higher levels, while a breakdown below $21.04 would signal a resumption of the downtrend. The stock's low beta of 0.08 means it is significantly less volatile than the market, which can be attractive for risk-averse investors but also means it may lag during broad market rallies. The current price is well above the 200-day moving average (not provided but inferred from the 6-month uptrend), reinforcing the bullish technical setup.
Beta
0.08
0.08x market volatility
Max Drawdown
-26.7%
Largest decline past year
52-Week Range
$21-$29
Price range past year
Annual Return
-10.8%
Cumulative gain past year
| Period | KHC Return | S&P 500 |
|---|---|---|
| 1m | +11.9% | +1.4% |
| 3m | +17.0% | +3.3% |
| 6m | +10.6% | +6.3% |
| 1y | -10.8% | +16.0% |
| ytd | +5.2% | +8.4% |
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KHC Fundamental Analysis
Revenue has been relatively stable but with minimal growth: the most recent quarter (Q1 2026) reported revenue of $6.047 billion, up just 0.8% year-over-year from $5.999 billion in Q1 2025. Over the trailing four quarters, revenue has ranged from $5.999 billion to $6.576 billion, indicating a flat to slightly declining top line. Segment data shows meats ($459M), cheese and dairy ($390M), desserts/toppings/baking ($244M), and coffee ($232M) as key categories, but no growth rates are provided. The lack of organic growth is a key concern, as the company struggles with changing consumer preferences and private label competition.
Profitability has been erratic due to large impairment charges. In Q1 2026, net income was $798 million with a net margin of 13.2%, a sharp improvement from the prior year's Q2 2025 loss of -$7.824 billion (driven by a $9.266 billion impairment). Gross margin has been relatively stable around 33-34% (Q1 2026: 34.4%), but operating margin improved to 17.8% in Q1 2026 from 19.9% in Q1 2025, suggesting cost pressures. The trailing twelve-month net income is negative (-$0.20 EPS) due to the large Q2 2025 loss, but normalized earnings are positive. The company's ability to sustain margins is critical for the investment case.
The balance sheet is moderately leveraged with a debt-to-equity ratio of 0.51 and a current ratio of 1.15, indicating adequate liquidity. Free cash flow generation is strong: TTM free cash flow is $3.945 billion, and Q1 2026 FCF was $766 million, providing ample coverage for the $474 million quarterly dividend (payout ratio of 59.4% in Q1 2026). ROE is negative (-14.0%) due to the large loss, but on a normalized basis, ROE is around 1.5-2%. The company's cash flow strength supports its high dividend yield of 6.6%, but the negative ROE and debt levels warrant monitoring.
Quarterly Revenue
$6.0B
2026-03
Revenue YoY Growth
+0.8%
YoY Comparison
Gross Margin
34.4%
Latest Quarter
Free Cash Flow
$3.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KHC Overvalued?
Since trailing net income is negative (EPS -$0.20), the trailing P/E is not meaningful. Therefore, we use the price-to-sales (P/S) ratio as the primary valuation metric. The current P/S ratio is 1.15x, while the forward P/E is 12.2x (based on estimated EPS of $2.25). The gap between the negative trailing P/E and the positive forward P/E implies the market expects a sharp earnings recovery in the coming year, reflecting the one-time nature of the 2025 impairment.
Compared to the packaged foods industry average P/S of approximately 1.5x (not provided, but typical for the sector), KHC's P/S of 1.15x represents a 23% discount. This discount is likely justified by the company's stagnant revenue growth and historical earnings volatility. However, the forward P/E of 12.2x is below the industry average of around 18x, suggesting the market is pricing in below-average growth and margin risk. The PEG ratio of 0.015 is extremely low, indicating the stock is cheap relative to expected earnings growth, but this figure may be distorted by the low base.
Historically, KHC's P/S ratio has ranged from about 1.0x to 7.0x over the past five years, with the current 1.15x near the bottom of that range. The P/B ratio of 0.69x is also near historical lows (range 0.6x-1.0x), suggesting the stock is trading at a significant discount to book value. This low valuation reflects the market's skepticism about the company's ability to return to sustainable growth, but it could also represent a value opportunity if the turnaround gains traction. The current valuation implies pessimistic expectations, and any positive catalyst could lead to multiple expansion.
PE
-4.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 4x~24x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-13.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: KHC's balance sheet is moderately leveraged with a debt-to-equity ratio of 0.51 and a current ratio of 1.15, indicating adequate liquidity but limited financial flexibility. The company's profitability is highly volatile due to large impairment charges, as seen in Q2 2025 when a $9.266 billion impairment led to a net loss of -$7.824 billion. While normalized earnings are positive, the negative trailing EPS of -$0.20 and ROE of -14.0% highlight the risk of further write-downs. Revenue growth is minimal at 0.8% YoY, and gross margin has been relatively stable around 33-34%, but operating margin declined to 17.8% in Q1 2026 from 19.9% in Q1 2025, suggesting cost pressures. The high dividend yield of 6.6% is supported by free cash flow, but a payout ratio of 59.4% leaves limited room for reinvestment.
Market & Competitive Risks: KHC trades at a discount to peers (P/S 1.15x vs. industry ~1.5x), but this discount may be justified by its stagnant growth and earnings volatility. The stock's beta of 0.08 implies minimal market correlation, making it a defensive name but also meaning it may lag during broad market rallies. Competitive pressures from private label brands and changing consumer preferences toward healthier options pose ongoing threats. Recent news highlights a potential Berkshire Hathaway stake sale, which could create selling pressure and signal lack of confidence. Additionally, the wide dispersion in analyst targets ($19-$40) reflects high uncertainty, and the lack of recent upgrades suggests low conviction in the near-term outlook.
Worst-Case Scenario: In a worst-case scenario, continued revenue stagnation, margin compression from input cost inflation, and a potential Berkshire stake sale could drive the stock back toward its 52-week low of $21.04. If the company announces another large impairment or cuts its dividend, investor sentiment could deteriorate further. From the current price of $25.67, this scenario implies a downside of approximately -18% to the 52-week low. The analyst low target of $19.00 suggests an even more severe decline of -26%, which could occur if the turnaround fails and competitive losses accelerate.