Kraft Foods Inc Stock Buy Recommendation Reiterated (KFT)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Kraft Foods (Nasdaq:KFT) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, reasonable valuation levels, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:

• KRAFT FOODS INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KRAFT FOODS INC increased its bottom line by earning $1.99 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.47 versus $1.99).
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 5.4% when compared to the same quarter one year prior, going from $976.00 million to $1,029.00 million.
• Net operating cash flow has significantly increased by 60.60% to $2,059.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.97%.
• 38.90% is the gross profit margin for KRAFT FOODS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.70% trails the industry average.

Kraft Foods Inc., together with its subsidiaries, manufactures and markets packaged food products worldwide. The company has a P/E ratio of 20, above the average food & beverage industry P/E ratio of 19.8 and above the S&P 500 P/E ratio of 17.7. Kraft has a market cap of $71.22 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 6.9% year to date as of the close of trading on Friday.

You can view the full Kraft Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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