Kraft Heinz Spinoff: Will it Impact Berkshire's Net Income?

Warren Buffett, who has built a fortune through his company Berkshire Hathaway Inc. (BRK.B), is not happy about the recent plans of The Kraft Heinz Company KHC spin-off. BRK.B currently has a 27.4% stake in Kraft Heinz, making it the company’s largest shareholder.  BRK.B’s earnings of non-controlled businesses include earnings from its investments in Kraft Heinz. Buffett’s investment in Kraft Heinz was worth $8.4 billion as of June 30, 2025.

To increase strategic focus and lower complexity, Kraft Heinz has decided to separate into two independent, publicly traded companies through a tax-free spin-off. Buffett and 3G Capital had joined forces to craft the high-profile merger of Kraft Foods and H.J. Heinz, creating Kraft Heinz back in 2015. However, following the recent announcement, Warren Buffett stated, "It certainly didn't turn out to be a brilliant idea to put them together, but I don't think taking them apart will fix it," per CNBC. Notably, in the second quarter of 2025, Berkshire wrote down $3.76 billion against its Kraft Heinz stake, following the latter’s announcement that it was evaluating potential strategic transactions on May 20, 2025. This weighed on BRK.B’s net income in the last quarter, dragging down net earnings attributable to Berkshire shareholders by about 59%.

Berkshire boasts an impressive acquisition as well as equity investment portfolio. This conglomerate, with Warren Buffett at its helm, targets businesses with durable earnings power, strong returns on equity, modest debt, and skilled management—acquired only at sensible valuations. Other than Kraft Heinz, Berkshire’s other equity investments include Occidental and Berkadia. These have collectively fueled Berkshire’s growth by adding resilient cash-generating businesses, diversifying income streams and expanding its investment base.

Impressive Inorganic Profile of BRK.B’s Competitors

Progressive Corporation’s PGR acquisition strategy focuses on building scale, technology and distribution while reinforcing its insurance portfolio. Progressive pursues disciplined, selective deals that deliver strategic value and complement its core strengths. Through targeted acquisitions, Progressive enhances efficiency and customer reach, ensuring long-term competitiveness in a dynamic insurance landscape.

Travelers Companies’ TRV acquisition strategy emphasizes reinforcing core insurance strengths while expanding into complementary markets. Travelers seeks disciplined acquisitions that enhance underwriting, technology and distribution capabilities. With a focus on sustainable shareholder value, Travelers carefully evaluates opportunities that bolster its competitive edge while maintaining a conservative balance sheet.

BRK.B’s Price Performance

Shares of BRK.B have gained 11.1% year to date, outperforming the industry.

BRK.B’s Expensive Valuation

BRK.B trades at a price-to-book value ratio of 1.61, above the industry average of 1.56. It carries a Value Score of D.

Estimate Movement for BRK.B

The Zacks Consensus Estimate for BRK.B’s third-quarter 2025 EPS has witnessed no movement over the past 30 days, while that for the fourth quarter has moved 14.1% higher in the same period. The consensus estimate for full-year 2025 EPS rose 0.9%, while the same for 2026 has declined 1.5% over the past seven days.
 

The consensus estimates for BRK.B’s 2025 and 2026 revenues indicate year-over-year increases. While the consensus estimate for BRK.B’s 2025 EPS indicates a year-over-year decline, the same for 2026 suggests an increase.  

BRK.B stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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