Does Kraft Heinz’s Improving Cash Flow Signal an Opportunity After Recent Share Price Decline?

If you find yourself pondering what to do with Kraft Heinz stock right now, you are not alone. Investors have watched the company’s share price swing between ups and downs over the past year, with a recent close at $27.50. While it might look like another sleepy packaged foods company at first glance, Kraft Heinz has quietly been stirring up some headlines and shifting sentiment in the market.

In the past month, shares have dipped about 4.4%, and for the year they are down over 10%. But zoom out a little further, and there are some signs of cautious optimism. Over the last 90 days, the stock actually moved up by 4.5%, and industry watchers have noted that the company's performance is starting to turn a few heads, especially after a pretty strong rebound in net income growth over the most recent annual period. That says a lot about how investors are re-assessing the risks and rewards in a traditionally steady sector.

The big question isn’t just whether Kraft Heinz can keep up this momentum, but whether it is truly undervalued compared to its potential. On several valuation checks, Kraft Heinz scores a 4 out of 6, meaning it’s undervalued by four different measures. That should definitely make you curious about what metrics are flashing “opportunity,” and which ones are still holding the stock back.

Up next, we will dig into these valuation methods and see where Kraft Heinz really stands. Of course, numbers are only part of the story. There is an even better perspective on valuation that we will explore at the end.

Kraft Heinz delivered -18.5% returns over the last year. See how this stacks up to the rest of the Food industry.

Approach 1: Kraft Heinz Cash Flows

A Discounted Cash Flow (DCF) model estimates what a company is really worth by projecting its future cash flows and then discounting those values back to today’s dollars. This helps investors see beyond the current share price and focus on long-term potential.

For Kraft Heinz, the most recent Free Cash Flow sits at $3.45 billion, with analysts expecting steady growth over the next decade. Projections suggest free cash flow could rise to about $4.71 billion by 2035, using inputs from both analyst forecasts and growth rate estimates. This growth profile highlights Kraft Heinz’s ability to generate real cash for shareholders over time.

Based on these projections, the DCF model calculates an estimated intrinsic value of $81.86 per share. Compared to the latest closing price of $27.50, this suggests the stock is approximately 66.4% undervalued. The takeaway is that, even in a mature industry, Kraft Heinz appears to offer a significant discount to its underlying fundamentals.

Result: UNDERVALUED

Our DCF analysis suggests Kraft Heinz is undervalued by 66.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Kraft Heinz Price vs Sales

The Price-to-Sales (PS) ratio is a useful valuation metric, especially for companies with consistent revenue streams like Kraft Heinz. Unlike earnings-based ratios, PS focuses on how much investors are paying for each dollar of sales. This can be more meaningful for mature, stable companies in the food industry, where margins and profits sometimes fluctuate due to non-operational factors.

Growth expectations and risk play an important role in determining what a normal or fair PS ratio should be. Companies expected to grow faster or bearing lower risk typically justify a higher multiple. In contrast, slower-growing or riskier businesses tend to trade at lower ratios. These benchmarks help investors gauge whether the market is pricing a stock too cheaply or richly compared to its fundamentals and industry context.

Kraft Heinz is currently trading at a PS ratio of 1.29x. This is lower than the peer group average of 1.79x, but higher than the broader food industry average of 0.82x. To provide an even more refined perspective, the Fair Ratio for Kraft Heinz takes into account its profit margins, growth outlook, market cap, and risk profile, and sits at 1.55x. By comparing the current PS ratio to the Fair Ratio, we see that Kraft Heinz is trading at a notable discount versus what would typically be expected, suggesting potential value for investors.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Kraft Heinz Narrative

Beyond numbers and traditional financial ratios, Narratives offer a new way to invest by letting you define and track your own “story” about Kraft Heinz. A Narrative is your perspective on where the company is headed, combining your assumptions for future revenue, margins, and growth into a personal financial forecast and fair value.

Unlike a simple estimate, a Narrative connects your view of a company’s strategy, such as expansion into emerging markets or new digital initiatives, to what those moves really mean for future profits and share price. This approach clearly links your story to real-world numbers.

Narratives are easy to build and compare on Simply Wall St, where millions of investors share their perspectives. The platform makes it simple to assess whether Kraft Heinz is a “Buy,” “Sell,” or “Hold” by comparing your Fair Value to the current market Price.

Additionally, Narratives can update automatically as new information becomes available, so your outlook remains relevant when news or earnings are announced.

For example, some investors expect strong growth from e-commerce and see fair value for Kraft Heinz as high as $51. Others are concerned about core market weakness and value the stock closer to $28. Your own Narrative lets you decide which story you believe and when to act.

Do you think there's more to the story for Kraft Heinz? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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