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Kraft Heinz (KHC): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 26, 2026, filed Nov 4, 2026; rules v1.1
Kraft Heinz (KHC): 1 rule of 10 triggered on the filings to Sep 26, 2026: FCF growth = the business improved; 2 with insufficient data; 3 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
FCF growth = the business improved Triggered · severity high · confidence high
Free cash flow rose $501M (+16%), from $3.2B to $3.7B, but working capital released $819M more cash than the year before and capital expenditure fell by $223M: more than the whole increase came from sources that need not repeat. Operating cash flow before working capital fell by $541M.
Innocent reading: An expansion programme finished, so capex fell back to maintenance levels for good.
Every rule
A01 FCF growth = the business improved Triggered severity high · confidence high
Free cash flow rose $501M (+16%), from $3.2B to $3.7B, but working capital released $819M more cash than the year before and capital expenditure fell by $223M: more than the whole increase came from sources that need not repeat. Operating cash flow before working capital fell by $541M.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | $4.2B |
| Operating cash flow | $4.5B |
| Capex, year before | $1.0B |
| Capex | $801M |
| Free cash flow, year before | $3.2B |
| Free cash flow | $3.7B |
| Change in FCF | $501M |
| Change in capex | −$223M |
| Working capital: change in its cash contribution | $819M |
| Of which: capex cut | $223M |
| Of which: working capital released | $819M |
| Share of the increase that need not repeat | +208.0% |
| Operating cash flow before working capital: change | -541000000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
What would explain it innocently
- An expansion programme finished, so capex fell back to maintenance levels for good
- Suppliers agreed longer payment terms in a contract
- Inventory was brought down after a glut and will stay down
What to look for in the filing
- Maintenance capex (what it costs to keep the assets working)
- Supplier payment terms and any supply-chain financing
- Management's capex guidance for next year
What would show the trap does not apply
- Next year's FCF holds or rises with capex back at its earlier level and working capital no longer releasing cash
- The 10-K's capex guidance and the segment capex show the cut is a completed programme, not deferral
- The working-capital release matches a disclosed change in terms or a divestiture, not stretched payables or a collection push
Look again: next filing.
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.4% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $95M |
| Revenue | $24.9B |
| SBC / revenue | +0.4% |
| Buybacks | $436M |
| Buybacks / SBC | 4.6 |
| Diluted shares, year before | 1,215.0M shares |
| Diluted shares | 1,187.0M shares |
| Diluted shares: change | -2.3% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew -2% against revenue -2% in Q3 2026; DSO 33 against a median of 33: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q3 2026 |
| Revenue, year over year | -2.0% |
| Receivables, year over year | -1.9% |
| Quarter before | Q2 2026 |
| Revenue y/y, quarter before | -1.4% |
| Receivables y/y, quarter before | -2.5% |
| Days sales outstanding | 33.5 |
| DSO, median of eight quarters | 33.4 |
| Receivables | $2.2B |
| Revenue | $6.1B |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 2026 (receivables and revenue) · Q3 2025 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
$1.9B comes due within a year, 2.9× covered by cash and investments of $1.9B plus $3.5B of free cash flow.
The figures and how they are read
| Cash and investments | $1.9B |
| Debt | $21.2B |
| Net debt | $19.3B |
| Due within a year | $1.9B |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $3.5B |
| Cash plus free cash flow | $5.4B |
| Coverage of what is due | 2.9 |
| Due in the second year | $1.9B |
| Balance sheet date | 2026-09-26 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS fell 12% and net income fell 12% in Q3 2026; the share count rose 0.5%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 2026 |
| Quarter before | Q3 2025 |
| EPS, year before | $0.52 |
| EPS | $0.46 |
| Net income, year before | $615M |
| Net income | $544M |
| Diluted shares, year before | 1,186.0M shares |
| Diluted shares | 1,192.0M shares |
| EPS growth | -12.1% |
| Net income growth | -11.5% |
| Diluted shares: change | +0.5% |
| eps from profit | -$0.06 |
| eps from share count | $0.00 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 2026 (net income, diluted shares, EPS) · Q3 2025 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not applicable
a loss on a trailing or mid-cycle basis: the P/E has no meaning
E07 A precise DCF value = the true value Insufficient data
no DCF in the valuation research for this company
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Kraft Heinz: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.