Walmart vs. Kraft Heinz: Which Consumer Staples Stock Offers Better Value in a Shifting Market

The consumer staples sector, long a refuge for investors seeking stability, faces a new era of scrutiny as macroeconomic pressures reshape valuations. Two titans of the industry-Walmart (WMT) and Kraft Heinz (KHC)-present contrasting profiles. This analysis evaluates their value investing potential and defensive positioning, drawing on Q3 2025 financial results and broader market dynamics.

The Case for Walmart: Growth Amid Elevated Valuation

Walmart's Q3 FY25 results underscore its resilience. Total revenue surged 5.5% year-over-year to $169.6 billion, driven by 5.3% comp sales growth in the U.S. and 12.4% growth in international markets (constant currency), as detailed in the Q3 FY25 earnings release. E-commerce sales accelerated by 22%, reflecting its adaptation to shifting consumer behavior. However, the stock's forward price-to-earnings (P/E) ratio of 42.58, according to Macrotrends P/E data,-well above its 5-year average-raises questions about whether these fundamentals justify the premium.

The company's strategic partnership with Ranpak Holdings Corp (PACK) adds intrigue. While no direct financial metrics for Walmart are disclosed, the collaboration is projected to generate $700 million in revenue over a decade, starting in 2026, according to Ranpak's Q3 call. This forward-looking bet on sustainability could enhance margins but introduces execution risk.

Kraft Heinz: A Discounted Defensive Play

Kraft Heinz, by contrast, trades at a significant discount. Its P/E ratio is below its 5-year average, and its price-to-book (P/B) ratio of 0.73, according to a GuruFocus report, suggests undervaluation relative to tangible assets. The stock offers a compelling 6.4% dividend yield, according to TS2 Tech coverage, bolstered by a $0.40 quarterly payout, while market capitalization hovers near $30 billion.

Yet, the company's fundamentals are mixed. Q3 revenue fell 2.2% year-over-year to $6.24 billion, as noted in the GuruFocus report, with organic sales declining 3.0%–3.5% for the full year. Margins contracted by 200 basis points to 32.3%, and emerging market struggles-particularly in Indonesia-weigh on growth. The debt-to-equity ratio of 0.51, per the same GuruFocus report, indicates prudent leverage, but the outlook for operating income remains bleak, with a projected 10%–12% decline according to that coverage.

Strategic Divergence and Risk Profiles

Walmart's strength lies in its scalable physical and digital infrastructure, with international expansion and e-commerce as tailwinds. However, its elevated P/E ratio implies limited margin of safety for value investors. Kraft Heinz, while cheaper, faces operational headwinds. Its high dividend yield and low P/B ratio offer defensive appeal, but declining sales and margins suggest structural challenges.

The key question is whether Walmart's growth premium is warranted in a low-growth environment. For defensive investors prioritizing income and downside protection, Kraft Heinz's metrics are more compelling. Yet, its business model-reliant on stagnant or declining categories like processed foods-may struggle to sustain dividends amid shifting consumer preferences.

Conclusion: Balancing Value and Resilience

In a market where inflation and interest rates remain volatile, defensive positioning is paramount. Walmart's scale and innovation provide long-term resilience but at a high price. Kraft Heinz, though discounted, offers immediate income and a margin of safety, albeit with operational risks. For value investors, the latter may currently present a more attractive entry point, provided its management can stabilize core markets and reverse margin erosion.