Weekly insights + SMS alerts
Kraft Heinz (KHC) stock rose Wednesday after the food giant reported better-than-expected third-quarter 2026 results and raised its full-year earnings outlook despite continued pressure on U.S. retail sales.
Adjusted earnings of 53 cents per share beat Wall Street's estimate of 42 cents.
Revenue fell 2% year over year to $6.12 billion but topped analysts' estimate of $6.09 billion. Organic net sales declined 1.1%, partly due to inventory pressures.
During Wednesday's earnings call, CEO Steve Cahillane described consumers as being in a "fragile state," saying Kraft Heinz wants to keep price increases as low as possible.
However, rising logistics, fuel and commodity costs could force the company to raise prices in 2027. CFO Andre Maciel said the company now expects inflation slightly above 5% next year, up from its previous forecast of 4% to 5%.
Cahillane warned that 2027 would likely bring "more pricing, not less pricing," even as the company prioritizes productivity improvements to protect margins.
Adjusted gross margin narrowed 40 basis points to 31.9% as higher procurement and logistics costs offset productivity gains.
Adjusted operating income fell 15.2% to $900 million, reflecting inflation, increased marketing spending and weaker sales volumes.
Year-to-date operating cash flow declined 4.1% to $3 billion, while free cash flow fell 5.2% to $2.4 billion.
Kraft Heinz ended the quarter with $1.89 billion in cash and about $18 billion in debt.
The company also declared a quarterly dividend of 40 cents per share, payable Dec. 23 to shareholders of record Dec. 4.
Separately, Kraft Heinz appointed Kelly Dilts and J. Michael Schlotman to its board, effective Nov. 4.
North American organic net sales fell 3.2%, primarily due to U.S. retail weakness and inventory pressures.
European and Pacific Developed Markets sales declined 1.3%, while Emerging Markets sales surged 15.6%.
Management expects double-digit Emerging Markets growth for the full year.
Meanwhile, Kraft Heinz continues to expand its Away From Home business and invest in brands such as Kraft Mac & Cheese, Lunchables and Capri Sun.
Kraft Heinz also agreed to sell its North American coffee business to One Rock Capital Partners at an enterprise value of $650 million.
The company will retain a 30% noncontrolling stake and expects about $500 million in net cash proceeds to reduce debt.
Cahillane said the transaction supports the company's strategy of focusing investments on priority brands.
The deal is expected to close in mid-2027 and support growth and margins.
Kraft Heinz raised its full-year adjusted earnings forecast to $2.07-$2.13 per share from $2.03-$2.09, above Wall Street's estimate of $2.05.
The company also improved its organic net sales forecast to a decline of 0.5% to 1.25%.
However, it maintained its forecast for a 16% to 18% decline in constant-currency adjusted operating income.
Management expects full-year inflation slightly above 4%, with fourth-quarter inflation reaching about 6%.
Kraft Heinz plans to invest an additional $700 million in product improvements, pricing, marketing, sales and research, primarily to revive its U.S. business.
KHC Price Action: Kraft Heinz stock climbed 6.87% to $26.20 on Wednesday at the time of publication, according to market data.
Real-time alerts on price moves, news, and trading opportunities.
Join 20,000+ investors. No spam, ever.
