QS Research · Michael Burry's Scion Capital analyst template · 2006
Kraft Heinz Co (KHC)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -8% · upside +10%
At $24.61 KHC trades at 1.96x TTM EV/Sales and a 12.1% FCF yield with P/B 0.81x, while TTM EBIT, EBITDA and net income are negative only because of impairments (TTM EBIT -$3.33B, EBITDA -$2.31B, FCF $3.53B). The problem is the operating trend: Q3 2026 organic sales fell 1.1%, North America organic fell 3.2%, and FY2026 adjusted operating income is guided down 16%-18%. Using today's 1.96x EV/Sales on TTM revenue of $24.78B, net debt of $19.32B and 1,183.83M shares gives a base value of $24.71 (+0.4%); a 5% lower revenue case gives $22.66 (-7.9%), and a 5% higher revenue case plus $0.5B coffee-sale debt paydown gives $27.18 (+10.4%). That brackets the price without the 30% base or -25% downside a long requires, so the call is watch; the CEO's $5.0M open-market buy and the coffee sale are real catalysts but not yet enough against declining organic sales.
Key numbers
- Share price: $24.61
- Market cap: $29.13B
- Latest financial period: TTM to Sep 26, 2026
- Revenue (TTM): $24.78B
- Price / book: 0.81x
The 15 boxes
- ✓ 1. Long-form business notes
Kraft Heinz is a roughly $25 billion FY2025 packaged-food company selling branded pantry, frozen, cheese, coffee and meat products through retail, foodservice and e-commerce; Walmart was 21% of FY2025 net sales. Between FY2020 and FY2025 it changed from three geographic reportable segments and six platforms to four operating/two reportable segments and eight platforms, and it announced a separation in September 2025 that was paused in February 2026. FY2025 revenue was $24.94B, operating income -$4.67B and net income to common -$5.85B, while operating cash flow was $4.46B and capex $801M. The sources do not give unit volumes or per-unit economics.
- ✓ 2. Competitive advantage
The sources show recognizable brands but no durable competitive advantage: revenue has gone from $26.64B in FY2023 to $25.85B in FY2024 to $24.94B in FY2025, and gross profit from $9.18B in FY2020 to $8.31B in FY2025, with no year in the six-year window above the FY2020 revenue base. The 10-K describes a highly competitive industry in which KHC competes on price and promotion against large national and international branded companies plus retailer private label, and says private label pressure has already restricted its ability to raise prices. Customer concentration is severe (Walmart ~21% of net sales in 2025, 2024 and 2023; top five North America customers ~46% of North America segment net sales in 2025), which sits with the retailers, not KHC. Cash generation is the one real asset: operating cash flow of $4.46B in FY2025 against capex of $801M, while FY2025 operating income of -$4.67B and net income to common of -$5.85B reflect charges the provided sources do not itemize.
- ✓ 3. 10-Q takeaways
Q3 2026 sales fell 2.0% to $6.115B and Organic Net Sales fell 1.1%, with North America and Europe/Pacific down while Emerging Markets grew 15.6% organic. Margins and adjusted earnings compressed: adjusted operating income fell 15.2% to $939M and adjusted EPS fell 13.1% to $0.53; Q3 net income was $536M after $72M impairment losses and $24M separation costs. Nine-month operating cash flow was $3.0B, cash was $1.9B, and YTD capital return was $1.4B of dividends with no buybacks. FY2026 guidance was updated to Organic Net Sales down 0.5% to down 1.25%, constant-currency adjusted operating income down 16% to down 18%, and adjusted EPS $2.07-$2.13; the 10-Q said risk factors had no material changes.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.