NEW YORK (TheStreet) -- Shares of Kraft Foods Group Inc. (KRFT) are sinking this morning, down 2.43% to $55.53, in early market trading after the food and beverage company had its rating cut to "neutral" from "outperform" by analysts at Credit Suisse.
The firm lowered its price target to $58 from $63, and cited the company's inability to sustain meaningful growth.
Credit Suisse analysts see concerns over whether Kraft's brands are strong enough to capitalize on positive factors after two consecutive years of sub-par revenue growth.
Also, the firm lowered its outlook for 2015, and now expects organic revenue growth of 2% and EPS growth of 5%.
Separately, TheStreet Ratings team rates KRAFT FOODS GROUP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate KRAFT FOODS GROUP INC (KRFT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KRFT's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- Net operating cash flow has slightly increased to $389.00 million or 2.63% when compared to the same quarter last year. Despite an increase in cash flow, KRAFT FOODS GROUP INC's average is still marginally south of the industry average growth rate of 7.60%.
- In its most recent trading session, KRFT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- KRAFT FOODS GROUP INC's earnings per share declined by 42.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KRAFT FOODS GROUP INC increased its bottom line by earning $4.51 versus $0.94 in the prior year. For the next year, the market is expecting a contraction of 30.1% in earnings ($3.15 versus $4.51).
- You can view the full analysis from the report here: KRFT Ratings Report