Kraft Foods Group (KRFT) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Kraft Foods Group ( KRFT) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Kraft Foods Group as such a stock due to the following factors:

  • KRFT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.8 million.
  • KRFT has traded 2.5 million shares today.
  • KRFT traded in a range 213.3% of the normal price range with a price range of $1.38.
  • KRFT traded below its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on KRFT:

Kraft Foods Group, Inc. operates as a consumer packaged food and beverage company in North America. The stock currently has a dividend yield of 3.9%. KRFT has a PE ratio of 17.3. Currently there are 6 analysts that rate Kraft Foods Group a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Kraft Foods Group has been 2.7 million shares per day over the past 30 days. Kraft Foods Group has a market cap of $31.8 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 0% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kraft Foods Group as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, growth in earnings per share and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • 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 improved to $508.00 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the Food Products industry average, but is less than that of the S&P 500. The net income increased by 7.3% when compared to the same quarter one year prior, going from $466.00 million to $500.00 million.
  • The gross profit margin for KRAFT FOODS GROUP INC is currently lower than what is desirable, coming in at 33.98%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 11.37% is above that of the industry average.
  • The debt-to-equity ratio is very high at 2.06 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, KRFT maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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