The Kraft Heinz Company (KHC): A Bull Case Theory

We came across a bullish thesis on The Kraft Heinz Company on D Invests’s Substack. In this article, we will summarize the bulls’ thesis on KHC. The Kraft Heinz Company’s share was trading at $26.90 as of September 8th. KHC’s trailing and forward P/E were 22.43 and 9.94 respectively according to Yahoo Finance.

The recent announcement of Kraft Heinz’s planned split into Global Taste Elevation Co (GTE) and North American Grocery Co (NAG) marks a pivotal reset after nearly a decade of disappointing stock performance following the 2015 merger. The combined entity struggled under aggressive cost-cutting through the 3G zero-based budgeting approach, which starved key brands of necessary investment, culminating in a $15.4 billion write-down in 2019 and a dividend cut. These operational missteps were compounded by structural headwinds, including shifts toward healthier diets, growth of GLP-1 weight loss drugs, and price-sensitive consumers increasingly favoring private-label alternatives, resulting in stagnant revenues despite stable margins.

The split aims to streamline operations and allow each business to focus on fewer categories with distinct growth trajectories, addressing complexity that had hindered performance. GTE will inherit Heinz, Philadelphia, Mac and Cheese, and other global sauce and shelf-stable brands, achieving $15.4 billion in revenue and $4 billion in adjusted EBITDA in 2024, yielding 26% margins, with potential mid-single-digit growth fueled by emerging markets and away-from-home channels. NAG will operate Oscar Mayer, Lunchables, Jell-O, Capri Sun, and other North American brands, generating $10.4 billion in revenue and $2.3 billion in EBITDA at just over 20% margins, offering stable free cash flow and a strong dividend with growth in line with inflation.

Both companies will maintain investment-grade status, and the split will be tax-free to shareholders, with GTE yet to appoint a CEO while Carlos Abrams-Rivera will lead NAG. The reorganization offers a clearer path for capital allocation, brand investment, and operational focus, potentially unlocking hidden value for shareholders while providing steady cash returns, even as Berkshire Hathaway’s 27% stake under Warren Buffett signals cautious optimism.

Previously we covered a bullish thesis on The Kraft Heinz Company (KHC) by Kostadin Ristovski, ACCA in April 2025, which highlighted struggles from aggressive cost-cutting, high debt, and underinvestment in key brands, while noting stable free cash flow. The stock has depreciated approximately 8.7% since our coverage. The thesis still stands as cash generation remains strong. D Invests shares a similar perspective but emphasizes the upcoming split into Global Taste Elevation Co and North American Grocery Co, highlighting potential value unlock and operational focus.

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Disclosure: None.