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1. Company Snapshot

1.a. Company Description

The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in the United States, Canada, the United Kingdom, and internationally.Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products.The company also offers dressings, healthy snacks, and other categories; and spices and other seasonings.


It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to chain, wholesale, cooperative and independent grocery accounts, convenience stores, drug stores, value stores, bakeries, pharmacies, mass merchants, club stores, and foodservice distributors and institutions, including hotels, restaurants, hospitals, health care facilities, and government agencies; and online through various e-commerce platforms and retailers.The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015.The Kraft Heinz Company was founded in 1869 and is headquartered in Pittsburgh, Pennsylvania.

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1.b. Last Insights on KHC

The Kraft Heinz Company's recent performance was negatively impacted by declining organic sales, weakening volumes, and shrinking margins across segments. The company's Q4 earnings revealed a 3.5% sales decline and a $9.3B impairment. A paused corporate split and a $600M restoration plan, aimed at restoring organic growth, carry high execution risk amid persistent brand and volume declines. Analysts have a consensus "Reduce" rating on the stock, with 18 hold recommendations and 3 sell recommendations.

1.c. Company Highlights

2. Kraft Heinz's Turnaround Strategy Unfolds with $600 Million Investment

The Kraft Heinz Company's fourth-quarter 2025 earnings report revealed a revenue growth of 0.6% for the next year, according to analysts' estimates. However, the company's actual EPS came out at $0.548, falling short of estimates at $0.61. The financial performance was characterized by a mix of challenges and opportunities, with the company facing headwinds such as a 13% exposure to SNAP in its US retail business. Despite this, Kraft Heinz remains disciplined in its commodity pricing strategy, following the commodity curve and pricing accordingly.

Publication Date: Feb -12

📋 Highlights
  • $600M Brand Investment Plan: to boost organic growth, targeting 5.5% of top-line investment
  • 70% Market Share Growth: in base elevation business over last 13 weeks
  • North America Focus: with 40% of categories having price-point strategies and $300M for product/packaging
  • Emerging Markets Growth: expected to near double digits in 2025
  • 13% SNAP Exposure: in US retail as both headwind and opportunity for small-pack strategies

Investment Strategy and Growth Prospects

The company's management announced a plan to invest an incremental $600 million to correct the underinvestment in its brands, with a focus on returning to organic growth. CEO Steve Cahillane expressed confidence that this level of investment, bringing the company's investment level to around 5.5% of its top line, will help the company achieve solid, profitable, organic growth. The investment will be prioritized in the North American grocery business, particularly in areas where opportunities for improvement have been identified. Emerging markets are expected to continue delivering strong results, with growth close to double digits in 2025.

Valuation and Return Metrics

To understand what's priced into Kraft Heinz's stock, we can examine various valuation metrics. The company's P/E Ratio stands at -5.07, indicating potential undervaluation or distress. The P/S Ratio is 1.19, and the EV/EBITDA is -12.17. In terms of return metrics, Kraft Heinz's ROIC is 6.27%, while its ROE is -13.44%, highlighting the challenges the company faces in generating returns for shareholders. The Dividend Yield is 6.4%, which may be attractive to income-focused investors.

Operational Improvements and Future Plans

The company is working to improve its connection with retailers through enhanced commercial activities, supplemented by additional personnel and technology. This aims to drive greater household penetration and attract consumers. Kraft Heinz is also focusing on value pricing through a combination of promotional activity, price rollbacks, and packaging investments. The goal is to fuel areas with good momentum while deploying resources to improve the rest of the portfolio, with a target to exit 2026 with the best trends seen during the year and an eye towards growth in 2027.

3. NewsRoom

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Kraft Heinz to Invest $250 Million in Montreal's Mont Royal Factory to Strengthen Canadian Manufacturing Capacity

Mar -20

Source: businesswire.com

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Kraft Heinz: A Turnaround Story Coming With A ~14% Free Cash Flow Yield

Mar -20

Source: seekingalpha.com

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Kraft Heinz: Challenges Are Real, But Too Cheap To Give Up On

Mar -20

Source: seekingalpha.com

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Kraft Heinz Company (NASDAQ:KHC) Receives Consensus Recommendation of “Reduce” from Analysts

Mar -20

Source: defenseworld.net

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Will Kraft Heinz's NFL Deal Strengthen Its Growth Recovery Plan?

Mar -19

Source: zacks.com

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Kraft Heinz (KHC) Declines More Than Market: Some Information for Investors

Mar -18

Source:

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Unilever, Kraft Heinz held talks to merge food business and condiments division, FT reports

Mar -18

Source: reuters.com

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Kraft Heinz Inks Breakthrough Deal With National Football League as First-Ever Condiment Partner

Mar -18

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (0.80%)

6. Segments

North America

Expected Growth: 2.5%

The North American market is mature, with slow growth expected due to high market penetration. However, the company's strong brand portfolio and potential for price increases will drive growth, aligned with the global growth hypothesis of 0.8, adjusted for regional market conditions.

International Developed Markets

Expected Growth: 1.8%

These markets have stable economies and consumer spending, but growth is limited by competition and market saturation. A growth rate slightly below the global hypothesis reflects these challenges, while steady gains from premium and niche brands will contribute to overall growth.

Emerging Markets

Expected Growth: 6.2%

Emerging markets are expected to drive growth due to rising consumer incomes, urbanization, and increasing demand for packaged foods. The growth rate above the global hypothesis reflects these favorable trends, positioning Kraft Heinz to capitalize on expanding market opportunities.

7. Detailed Products

Condiments and Sauces

A range of condiments and sauces that add flavor to meals, including ketchup, mayonnaise, and relish.

Meat and Seafood

A variety of meat and seafood products, including bacon, ham, and tuna.

Snacks

A range of snack foods, including crackers, nuts, and cheese.

Beverages

A selection of beverages, including coffee, tea, and juice.

Dairy and Cheese

A variety of dairy and cheese products, including milk, yogurt, and cheese.

Meal Solutions

A range of meal solutions, including macaroni and cheese, and frozen meals.

Infant Nutrition

A range of infant nutrition products, including formula and baby food.

Plant-Based Products

A range of plant-based products, including vegan cheese and meat alternatives.

8. The Kraft Heinz Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Kraft Heinz Company is medium due to the presence of alternative food and beverage products in the market. While there are some substitutes available, they are not a significant threat to the company's business.

Bargaining Power Of Customers

The bargaining power of customers for The Kraft Heinz Company is low due to the company's strong brand portfolio and wide distribution network. Customers have limited bargaining power to negotiate prices or demand customized products.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The Kraft Heinz Company is medium due to the presence of multiple suppliers for raw materials and ingredients. While suppliers have some bargaining power, the company's large scale of operations and long-term contracts mitigate this risk.

Threat Of New Entrants

The threat of new entrants for The Kraft Heinz Company is low due to the high barriers to entry in the food and beverage industry. New entrants would need significant investment in manufacturing, marketing, and distribution to compete with established players like Kraft Heinz.

Intensity Of Rivalry

The intensity of rivalry for The Kraft Heinz Company is high due to the presence of several established players in the food and beverage industry. The company faces intense competition from rivals such as General Mills, PepsiCo, and Nestle, which leads to high marketing and advertising expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.92%
Debt Cost 5.69%
Equity Weight 71.08%
Equity Cost 7.19%
WACC 6.75%
Leverage 40.68%

11. Quality Control: The Kraft Heinz Company passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Altria

A-Score: 7.6/10

Value: 6.8

Growth: 5.8

Quality: 6.5

Yield: 10.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

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General Mills

A-Score: 6.6/10

Value: 5.7

Growth: 4.1

Quality: 5.8

Yield: 8.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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Ingredion

A-Score: 6.2/10

Value: 7.2

Growth: 6.6

Quality: 6.1

Yield: 6.0

Momentum: 1.5

Volatility: 10.0

1-Year Total Return ->

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Kraft Heinz

A-Score: 6.1/10

Value: 8.9

Growth: 3.8

Quality: 4.3

Yield: 9.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Walmart

A-Score: 5.4/10

Value: 2.5

Growth: 5.4

Quality: 5.3

Yield: 2.0

Momentum: 7.5

Volatility: 9.3

1-Year Total Return ->

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Costco Wholesale

A-Score: 5.2/10

Value: 2.0

Growth: 6.8

Quality: 5.7

Yield: 2.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

21.57$

Current Price

21.57$

Potential

-0.00%

Expected Cash-Flows