Kraft Heinz: Berkshire Sale Doesn’t Sway Our Stance That Shares Are a Bargain

Key Morningstar Metrics for Kraft Heinz

• Fair Value Estimate: $51
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

Kraft Heinz’s KHZ shares tumbled 4% in after-hours trading on Jan. 20, 2026, on news that Berkshire Hathaway intends to exit its position (325 million shares, or more than one-fourth of shares outstanding). Greg Abel recently replaced legendary investor Warren Buffett as Berkshire’s CEO.

Why it matters: For years, Buffett had chided Kraft Heinz for underperformance. We think wide-moat Berkshire’s move reflects Abel’s desire to clean up its investment portfolio early in his tenure.

• From where we sit, Kraft Heinz’s strategic playbook—anchored in extracting inefficiencies to fuel investments in its brands and capabilities—is sound. But we think the market is unlikely to grant a higher valuation until a durable improvement in volumes becomes evident.
• We forecast 6% of sales to be directed to research, development, and marketing annually through fiscal 2034, up from 4% historically.

The bottom line: Our $51 per share fair value estimate for narrow-moat Kraft Heinz holds. Our valuation reflects our sum-of-the-parts analysis, including the firm’s upcoming split.

• Shares trade at half our valuation on concerns that volume declines will persist amid intensifying competition. However, we expect the prioritization of investments in its brands and capabilities to stabilize the intangible assets that underpin its competitive edge.
• We think these investments will drive 2% average annual sales growth and operating margins that hold in the low 20s long-term; our view aligns with management’s consolidated targets of 2%-3% organic sales growth and 6%-8% adjusted EPS growth.

Coming up: Following similar moves by peers, we see the split of Kraft Heinz’s sauces, spreads, and seasonings arm (which we value at 14 times EBITDA on strong sales and profit potential) from its North American grocery brands (9 times) as a bid to unlock a higher multiple for sauces.