Stock 2: Kraft Foods (KRFT)
Dividend Yield: 3.71%
BRK weighting as of 12/31/2013: 0.01%
Value of holdings: $10.4 million
Kraft Foods is a food and beverage processing and packaging giant based out of Northfield, Illinois. Some of its most popular brands include Cheez Whiz, Cool Whip, Jell-O, Kool-Aid and Oscar Mayer.
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, revenue growth and compelling growth in net income. 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.
- KRFT's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 2.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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.
- Net operating cash flow has declined marginally to $924.00 million or 4.54% when compared to the same quarter last year. Despite a decrease in cash flow KRAFT FOODS GROUP INC is still fairing well by exceeding its industry average cash flow growth rate of -36.83%.
- 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.
- You can view the full analysis from the report here: KRFT Ratings Report