Kraft Foods Group Inc. (KRFT): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Kraft reported mixed third quarter 2014 results beating the Zacks Consensus Estimate for earnings but missing the same for revenues as price increases to sustain rising commodity costs, mainly dairy and meat, hit sales volumes. Adjusted earnings of $0.78 rose 22% year over year as lower advertising costs, productivity gains and a lower tax rate made up for flat top line growth. In fact, Kraft's top line has been soft ever since the split from Mondelez due to broader macro pressures. Several of its product categories have been sluggish due to consumption weakness and stiff competition. Kraft's organic sales growth lagged market expectations so far this year and is expected to continue in the fourth quarter. In addition, rising food costs, increasing competitive pressures and challenging industry conditions concern us. However, Kraft's strong brand portfolio, aggressive cost reduction and efficiency-improvement initiatives keep our faith in the stock.

Overview:

Headquartered in Northfield, IL, Kraft Foods Group, Inc. (KRFT) is one of the largest consumer packaged food and beverage companies in North America. It sells branded products in beverages, cheese, coffee, refrigerated meals and grocery categories, mainly across the U.S. and Canada. Some of its popular brands include Kraft, Maxwell House, Oscar Mayer, Planters and JELL-O.

Kraft Foods Group was spun off from Mondelez International into a separate independent company on Oct 1, 2012, and consists of the North American grocery business of the old Kraft Foods.

Kraft's reportable segments are Beverages, Cheese, Refrigerated Meals, Meals & Desserts, Enhancers & Snack Nuts, and Canada. The remaining businesses including Foodservice and other international businesses are clubbed under "Other Businesses".

Management's long-term growth targets include organic sales growth at or above market growth of the North American food and beverage industry, mid single-digit operating income growth and mid-to-high single-digit earnings growth.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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