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How is Kraft Foods Placed for 4Q? - Analyst Blog
Kraft Foods Group Inc. ( KRFT ) is set to report fourth quarter 2012 results on Feb 15. Last quarter it posted a 16.18% positive surprise. Let's see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Kraft Foods Group, reported its third quarter 2012 results,
after its spun off from the old Kraft Foods. The packaged food
and beverage company beat on both the top and bottom lines in its
third quarter 2012 on the back of innovation, productivity
improvements, volume growth, lower taxes and increased marketing
investments. The fourth quarter results will be Kraft's first
earnings report as a standalone entity versus carve-out
financials reported in the third quarter.
Our proven model does not conclusively show that Kraft Foods Group is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: Kraft Foods Group's currently has a negative Expected Surprise Prediction (ESP) of -10.00%.
Zacks Rank #2 (Buy): Kraft Foods' Zacks Rank #2 (Buy) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Though brand building and innovation are expected to boost consumption, the company expects revenues to be flat to down in the fourth quarter from the year-ago levels due to difficult comparisons and more product pruning. Product pruning is expected to hurt the top line by 1.5 to 2 points in the quarter. In the quarter, the company expects to record restructuring costs of $225 million.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Flowers Foods, Inc. ( FLO ), Earnings ESP of 5.56% and Zacks Rank #1 (Strong Buy)
J&J Snack Foods Corp. ( JJSF ), Earnings ESP of 5.00% and Zacks Rank #1 (Strong Buy)
), Earnings ESP of 0.97% and Zacks Rank #2 (Buy)
FLOWERS FOODS (FLO): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
KELLOGG CO (K): Free Stock Analysis Report
KRAFT FOODS GRP (KRFT): Free Stock Analysis Report
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