Kraft Heinz to Split Into Two Companies: What Investors Should Know

The Kraft Heinz Company (KHC) has announced plans to separate into two independent, publicly traded companies through a tax-free spin-off, with the transaction expected to close in the second half of 2026. The company’s board of directors unanimously approved the separation, citing increased strategic focus and reduced complexity as key drivers.

Kraft Heinz Separation Details

If all goes well, one of the resultant entities would be Global Taste Elevation Co., a global Taste Elevation and shelf-stable meals business with net sales of $15.4 billion and adjusted EBITDA of $4 billion in 2024. The company’s portfolio will include Heinz, Philadelphia and Kraft Mac & Cheese, with sauces, spreads and seasonings accounting for nearly 75% of sales. Emerging markets and away-from-home channels each contributed about 20% of 2024 net sales.

The second entity, North American Grocery Co., will focus on staples across the North American market with approximately $10.4 billion in net sales and $2.3 billion in adjusted EBITDA in 2024. Its portfolio will include Oscar Mayer, Kraft Singles and Lunchables, with roughly 75% of net sales coming from brands ranked #1 or #2 in their respective categories.

Kraft Heinz expects up to $300 million in dis-synergies tied to the transaction, but has identified opportunities to offset much of this impact. Both companies are targeting capital structures consistent with investment-grade credit ratings, while the current aggregate dividend level is expected to be maintained.

The separation will provide both companies with greater strategic and operational focus. This will also enable both companies to dedicate the right level of attention and resources to their brand portfolios, reduce operational complexity and drive stronger performance.

Kraft Heinz’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have lost 2.6% in the past three months compared with the industry’s decline of 1.5%. The S&P 500 index has increased 9% in the same period.

KHC Stock Past Three Months Performance

Is Kraft Heinz a Value Play Stock?

Kraft Heinz currently trades at a forward 12-month P/E ratio of 9.92X compared with the industry average of 15.9X and the sector’s 17.17X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.

KHC Valuation Picture

Stocks to Consider

Post Holdings, Inc. (POST) operates as a consumer-packaged goods holding company in the United States and internationally. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 10.9%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.

The Chefs' Warehouse, Inc. (CHEF) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels.

Laird Superfood, Inc. (LSF) manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank #2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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