NEW YORK (TheStreet) -- Kraft Foods (KRFT - Get Report) shares are down -0.6% to $56.32 in early market trading on Friday following yesterday's release of the company's first quarter earnings results.
The food and beverage manufacturer posted a year over year quarterly revenue decrease of -3.3% to $4.36 billion, missing analysts consensus estimates of $4.47 billion in revenue.
The company posted net income of $513 million, or 78 cents per diluted share, beating analysts estimates by 2 cents.
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TheStreet Ratings team rates KRAFT FOODS GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate KRAFT FOODS GROUP INC (KRFT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to other companies in the Food Products industry and the overall market, KRAFT FOODS GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- Currently the debt-to-equity ratio of 1.92 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, KRFT maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has declined marginally to $924.00 million or 4.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: KRFT Ratings Report