Is KHC a good stock to buy? We came across a bullish thesis on The Kraft Heinz Company on StockCompass’s Substack. In this article, we will summarize the bulls’ thesis on KHC. The Kraft Heinz Company’s share was trading at $25.01 as of July 1st. KHC’s trailing and forward P/E were 22.43 and 12.25 respectively according to Yahoo Finance.
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The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. KHC is positioned as a contrarian deep-value opportunity in the consumer staples sector, offering an unusually high 6.56% free cash flow-backed dividend yield as its shares trade near historic lows following years of valuation compression and investor skepticism.
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Despite reporting a FY2025 GAAP loss driven by a $9.3 billion non-cash goodwill impairment, the company continues to generate strong underlying cash flows, producing $3.66 billion in trailing twelve-month free cash flow that comfortably supports its $1.60 annual dividend with a sustainable 52% payout ratio.
This disconnect between reported earnings and cash generation has contributed to an attractive valuation, with Kraft Heinz trading at just 0.69x price-to-book value and approximately 12x adjusted earnings, well below broader packaged food industry averages. The investment thesis rests on the market potentially recognizing the company’s resilient cash-generating ability rather than focusing on accounting-driven losses.
Operationally, while North American organic sales remain under pressure as management continues executing a multi-year turnaround, the international business provides encouraging momentum with 4.2% organic growth in the first quarter of 2026, demonstrating that portions of the portfolio continue to expand. The presence of Berkshire Hathaway, which owns a 26.9% stake, further reinforces long-term confidence and aligns shareholders with a disciplined value-oriented investor.
Although the turnaround remains unproven and investor concerns surrounding the balance sheet persist, Kraft Heinz is viewed as a business with durable brands, resilient cash flows, and meaningful downside support from its historically attractive valuation and dividend yield. For patient, risk-tolerant income investors, the current entry point offers substantial income while awaiting operational stabilization and a potential rerating as sentiment improves, creating an attractive long-term risk-reward profile.
Previously, we covered a bullish thesis on The Kraft Heinz Company (KHC) by Kostadin Ristovski, ACCA in April 2025, which highlighted the company’s resilient cash flows, deleveraging, and defensive income appeal. KHC’s stock price has depreciated by approximately 15.10% since our coverage. StockCompass shares a similar view but emphasizes on the company’s deep-value turnaround, historically depressed valuation, strong dividend coverage, and potential rerating.
The Kraft Heinz Company is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held KHC at the end of the first quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of KHC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KHC and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
