I've been following the Kraft Heinz (KHC 0.56%) story since 2013, when Warren Buffett teamed up with 3G Capital to take H.J. Heinz private. Two years later, they merged the entity with Kraft Foods to create Kraft Heinz. At the time, it looked like a brilliant move, streamlining two blue chip companies with incredible scale and brand power.

But since 2017, shares have fallen nearly 70% in value. According to many valuation metrics, Kraft Heinz stock is a bargain right now. It's rare to buy such a well-known, high-quality business at such a discount. But before you jump in, there's one thing you need to understand.

The factor to understand about Kraft Heinz stock

Kraft Heinz is a combination of two iconic businesses. But that doesn't mean the company is growing. Revenue growth in recent years has been a challenge, fueled by lackluster consumer demand stemming from inflation, increased competition due to direct-to-consumer start-up brands, and private label competition within stores. Put simply, people aren't as willing or able to spend their dollars on the premium branded products that dominate Kraft Heinz's lineup.

KHC Revenue (TTM) data by YCharts.

Profit margins, meanwhile, have remained a bit steadier, but there have been some severe quarterly stumbles due to supply chain issues and a limited ability to pass on higher costs to customers. All in all, the company's price-to-earnings ratio now sits around 13.3 -- hovering around its lowest levels since 2020. On a forward basis -- that is, based on what analysts expect the company to earn next year -- shares trade at just 11 times earnings. That looks very cheap on paper, but there's one issue: Kraft Heinz's revenue growth challenges aren't going away anytime soon, meaning profit margin expansion will be its biggest source of earnings growth over the near term.

This is what you must understand about Kraft Heinz stock today. Yes, shares are cheap, but they're cheap for a reason. High prices and mounting competition aren't going away. This narrows the company's ability to grow, meaning shares aren't nearly as cheap as they first appear.