Kraft Heinz (NASDAQ:KHC) reported third-quarter results on Oct. 31 that were mediocre. However, it did manage to report earnings per share of 69 cents, 15 cents higher than analysts’ average estimate. Kraft Heinz stock jumped more than 13% on the positive surprise.

As a result of the  better-than-expected earnings, my fellow InvestorPlace columnist, Dana Blankenhorn, recommended that anyone who bought KHC stock before August or in September or later ought to give the relatively new CEO time to revitalize its portfolio. 

Those are wise words because KHC stock still has an attractive 4.9% dividend yield that investors can enjoy until the company gets its act together.  

In February, I came up with seven reasons why Kraft Heinz stock is a contrarian buy. At the time it was trading around the same price where it is now. 

However, a quick review of some of my reasons for buying KHC stock suggests they haven’t changed too much. 

Warren Buffett

Warren Buffett has lost billions on KHC stock. It’s got to be one of his biggest mistakes in an illustrious career. He’s even admitted as much, saying Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) paid too much for the shares. 

I was hopeful that Buffett would buy out his 3G partners or at least up his stake in the company, but it’s clear that he’s fearful of compounding an already big mistake with another one. 

If Buffett raises his stake or acquires 3G,  KHC stock price would no doubt get a boost. But that’s clearly not in the cards. 

A New CEO

I argued in February that Kraft Heinz needed a new CEO with real packaged goods experience. Former CEO Bernardo Hees was a 3G guy. He’d been a 3G guy his entire career. The company needed somebody who was less attached to one of its primary owners. 

At the end of April, Kraft Heinz hired Miguel Patricio, the former chief marketing officer of Anheuser-Busch InBev (NYSE:BUD). A marketing person, not a bean counter, Patricio will be more passionate about the company’s products. 

“We think this change at the helm is a good sign for investors because it demonstrates that the company is very serious about pivoting its priorities toward growth rather than just cost cutting,” Credit Suisse wrote. 

I couldn’t agree more. 

However, it’s important to remember that Patricio was hired by 3G. It’s not like he was recruited by a major headhunting firm that found him to be the best person for the job. Kraft Heinz Chairman Alex Behring, one of 3G’s founding partners, approached him about the CEO role early in 2019. 

“He’s completely a 3G cultural artifact,” an executive at AB InBev during Patricio’s tenure there is reported to have stated anonymously about the hiring. “Going from Bernardo to him is not a change, it’s more like continuity.”

I’m on the fence on this one. Marketing people always want to spend money if they can. If the board lets him do so, and that’s a big if, he’ll be different from his predecessors.

Patricio needs more than one quarter to demonstrate that this is the case. His affiliation with 3G does worry me. 

Divestitures

Kraft Heinz finished Q3 with total debt of $30.7 billion, $400 million less than its debt at the end of December. 

Its total debt is 77% of its market cap. That compares to 58% for AT&T (NYSE:T), the poster child for excessive debt.  

As I mentioned in February, Kraft Heinz has got to divest some of its brands so that it can strengthen its balance sheet while concentrating its future focus on its most influential brands. 

 KHC has looked to sell multiple brands, but in some cases, it’s faced difficulty getting a reasonable price for them, while in others the for- sale sign has been taken down until the CEO’s had some time to consider what stays and what goes. 

On Kraft Heinz’s website, the company says it has 25 global brands, including Kraft, Heinz, and Oscar Meyer. The company could sell half of its brands and still have too many. 

I don’t relish the CEO’s job. 

The Bottom Line on Kraft Heinz Stock

I consider the gains of KHC stock price following the earnings a dead-cat bounce, relief rally. 

Kraft Heinz’s business in the U.S. continues to shrink. Its brands have become tired and old. If not for KHC’s 4.9% dividend yield, I’d find it very hard to own KHC stock right now. 

Patricio took the job on July 1. He’s had just four months in the position. I’d wait until the company reports its Q4 results in February before seriously considering KHC stock. And then, I wouldn’t focus so much on the numbers, but on what the CEO is saying about the company’s business.

It takes a year or more for a new CEO to get comfortable in the job. We’re still a long way off from that point.  

 At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.