TSC Ratings' Updates: Kraft Foods

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Friday, June 5.

We've upgraded AmerisourceBergen(ABC Quote) from hold to buy, driven by its growth in earnings per share, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Earnings per share improved by 17.3% in the most recent quarter compared with the same quarter last year, and we feel that the company's two-year trend of EPS growth should continue. Net income increased by 7.1% compared with the year-ago quarter, from $133.9 million to $143.4 million. Net operating cash flow increased by 74.2% to $336.8 million, exceeding the industry average cash flow growth rate of 53.4%. AmerisourceBergen's debt-to-equity ratio of 0.4 is below the industry average, though the quick ratio of 0.5 implies a potential problem covering short-term cash needs. Return on equity improved compared with the year-ago quarter. ...