KHC
KHCThe Kraft Heinz Company is a major player in the packaged foods industry, producing shelf-stable and frozen goods.
It is defined by its vast portfolio of iconic household brands, leveraging its extensive distribution network for scale and stability.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy KHC Today?
Analysis of Kraft Heinz (KHC)
Technical Analysis KHC is in a pronounced downtrend, trading near its 52-week low and showing substantial underperformance against the market. The stock appears technically oversold, evidenced by a steep maximum drawdown and weak relative strength. While it may attract contrarian interest, there is no clear reversal signal yet.
Fundamentals The company has regained profitability in Q3 with solid margins, and its balance sheet shows moderate debt levels with adequate liquidity. However, operational efficiency remains modest, reflected in low ROE and inventory turnover, indicating the business faces challenges in delivering strong returns on capital.
Valuation & Risk Valuation sends mixed signals: the stock trades below book value but has a very high EV/EBITDA, hinting at cash flow concerns. Risks are moderate, with low volatility but a notable drawdown history. The lack of industry peer data makes relative valuation difficult to assess confidently.
Investment Recommendation
KHC is not currently a compelling buy. While the stock appears oversold and trades at a discount to book value, weak technical momentum, mixed valuation signals, and modest operational efficiency outweigh potential value. Investors may want to wait for clearer signs of fundamental improvement or a decisive technical rebound before considering a position.
KHC 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on the comprehensive analysis, here is the 12-month outlook for Kraft Heinz (KHC):
12-Month Outlook for KHC
The primary catalyst for KHC will be its ability to demonstrate sustained fundamental improvement, particularly by translating its regained profitability into stronger returns on capital and operational efficiency. A key hurdle will be reversing the negative technical momentum and building investor confidence. Significant risks include the persistent weak price trend failing to reverse, ongoing concerns about cash flow generation hinted at by the high EV/EBITDA, and the modest operational metrics that limit growth potential. Given the lack of a clear analyst target, a cautious target range would be between $20 and $28, heavily dependent on the company showing concrete signs of a successful operational turnaround.
Wall Street Consensus
Most Wall Street analysts are optimistic about KHC's 12-month outlook, with consensus target around $24.32, indicating expected upside potential.
Bulls vs Bears: KHC Investment Factors
Overall, KHC has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- High Dividend Yield: Attractive 6.6% yield appeals to income-seeking investors.
- Restructuring and New Leadership: New CEO and business split could drive future growth.
- Low Valuation Expectations: Beaten-down stock price reflects minimal growth expectations.
- Potential 2026 Rebound: Analysts see potential for stock recovery next year.
Bearish
- Declining Revenue and Sales: Q3 revenue fell 2.3% with organic sales down 2.5%.
- Lowered Guidance: Company cut outlook amid challenging operating environment.
- Negative Stock Momentum: Shares consistently underperformed market with recent plunge.
- Shifting Consumer Preferences: Strategic concerns grow as consumer tastes change.
KHC Technical Analysis
KHC has demonstrated notably weak performance over the past year, trading significantly below its 52-week high and exhibiting substantial underperformance versus the broader market.
The stock has declined over both the one-month (-3.61%) and three-month (-6.11%) periods, and its significant negative relative strength of -9.48% confirms it has substantially underperformed the market benchmark during this timeframe. The exceptionally low beta of 0.065 indicates minimal volatility and a very weak correlation to market movements.
Currently trading at $23.51, KHC is positioned near the bottom of its 52-week range, sitting just above the support level of its 52-week low of $22.91 and far below its high of $33.35. Given the severe -28.58% maximum drawdown and its proximity to the annual low, the stock appears to be in an oversold condition.
| Period | KHC Return | S&P 500 |
|---|---|---|
| 1m | -0.5% | +1.3% |
| 3m | -3.3% | +5.7% |
| 6m | -8.1% | +10.6% |
| 1y | -15.3% | +16.5% |
| ytd | -0.3% | +1.1% |
KHC Fundamental Analysis
Revenue & Profitability KHC's Q3 results show a stable revenue base of $6.24 billion, though this represents a slight sequential decline from Q2. Profitability metrics improved significantly from the anomalous Q2 loss, with Q3 delivering a solid 9.9% net profit margin and a 16.4% operating margin, indicating restored operational control.
Financial Health The company maintains a moderate financial structure with a debt-to-equity ratio of 0.51 and a low debt ratio of 0.26. While the current ratio of 1.13 shows adequate short-term liquidity, the interest coverage of 4.3 times earnings suggests manageable, though notable, debt servicing costs relative to operating profits.
Operational Efficiency KHC exhibits modest efficiency with an ROE of 1.5% and an asset turnover of 0.08, reflecting the capital-intensive nature of its business. The cash conversion cycle of 10.2 days demonstrates effective working capital management, though inventory turnover remains relatively low at 1.2 times, pointing to potential optimization opportunities.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Level
Given KHC's negative trailing P/E ratio of -6.34, stemming from negative earnings, traditional P/E analysis is not applicable. The forward P/E of approximately 12.5 is more informative, but the negative PEG ratio suggests a lack of expected earnings growth to support this multiple. The stock appears inexpensive based on its assets, with a P/B ratio of 0.67 indicating the market price is below book value, and a reasonable P/S ratio of 1.09. However, the extremely high EV/EBITDA of nearly 38.6 signals significant operational leverage or depressed earnings, pointing toward potential overvaluation when considering cash flow generation. Overall, the valuation picture is mixed but leans concerning due to the negative earnings and very high EV/EBITDA.
Peer Comparison
A comparative analysis against industry averages cannot be conclusively performed as the specific industry data was not provided. Without benchmark ratios for the consumer packaged goods or relevant sub-sector, it is impossible to determine if KHC's P/B of 0.67 and P/S of 1.09 represent a discount or premium to its peers. The high EV/EBITDA is a notable outlier that would typically be compared against an industry norm to assess relative valuation, but this context is missing. Therefore, any assertion of relative over- or undervaluation remains speculative without the necessary industry benchmark data.
Investment Risk Disclosure
Volatility Risk: KHC exhibits extremely low volatility relative to the broader market, as evidenced by a remarkably low Beta of 0.065, suggesting minimal correlation with market swings. However, the stock has experienced a significant maximum one-year drawdown of -28.58%, indicating it is still susceptible to substantial price depreciations from its peak, despite its low-beta profile.
Other Risks: The absence of notable short interest alleviates immediate pressure from speculative selling, reflecting a degree of market consensus on its valuation stability. From a liquidity perspective, as a large-cap constituent of major indices, the stock benefits from strong trading volumes and market depth, mitigating standard liquidity and execution risks for investors.
FAQs
Neutral to slightly bearish for now. While the 6.6% dividend yield is attractive for income investors, the stock faces significant headwinds from declining revenue, a challenging operating environment, and negative momentum. The mixed valuation (low P/B but negative earnings and high EV/EBITDA) and a consensus "Sell" analyst rating suggest caution is warranted.
Suitable for: High-risk income investors with a multi-year time horizon who can tolerate near-term volatility while betting on a successful long-term turnaround.
Based on the current valuation metrics, KHC stock appears fairly valued to slightly undervalued.
Key Valuation Metrics: - Forward P/E of 12.5 (reasonable for stable consumer staples) - P/B of 0.67 (trading below book value) - P/S of 1.09 (modest sales multiple)
Comparison & Reasoning: The forward P/E of 12.5 appears reasonable relative to historical consumer staples averages (typically 15-20x). The stock trades at a discount to book value (P/B 0.67), suggesting potential undervaluation of assets. However, the negative trailing P/E and elevated EV/EBITDA of 38.6 reflect current earnings challenges. The valuation seems to balance KHC's stable revenue base and restored profitability (9.9% net margins) against its operational constraints and debt load. For a mature consumer staples company, these metrics suggest the market has appropriately priced KHC's mixed fundamentals.
Of course. Based on the provided data, here are the key risks of holding Kraft Heinz (KHC) stock, ordered by importance.
1. Significant Price Depreciation and Weak Momentum: Despite its low volatility, the stock has experienced a severe maximum drawdown of -28.58%, is trading near its 52-week low, and has substantially underperformed the market, indicating deep-seated negative investor sentiment and a lack of positive catalysts. 2. Operational and Competitive Risks: The company's low asset turnover (0.08) and inventory turnover (1.2x) suggest operational inefficiency and potential challenges in a highly competitive, low-growth food industry, which is reflected in its modest Return on Equity (1.5%). 3. Financial Risk from Debt Servicing: While the debt levels are moderate, an interest coverage ratio of 4.3 times earnings indicates that a significant portion of operating profit is dedicated to servicing debt, leaving the company more vulnerable to earnings declines or rising interest rates.
Based on the provided analysis, here is the forecast for Kraft Heinz (KHC) stock for 2026.
My forecast for KHC's 2026 stock price is a base case range of $22 to $28, with a bull case of up to $32, contingent on a successful execution of its operational turnaround. Key growth drivers will be sustained margin improvement through cost-cutting, effective management of its debt load to free up cash flow, and successful innovation in its product portfolio to stabilize revenues. The primary assumptions are that macroeconomic pressures on consumer spending will not significantly worsen and that the company can maintain its current market share. This forecast is highly uncertain and hinges entirely on KHC demonstrating consistent, tangible progress in its fundamental performance to rebuild investor confidence.