Kraft Foods (KRFT) Recalls 1.2 Million Cases of Cottage Cheese

NEW YORK (TheStreet) -- Kraft Foods (KRFT) has issued a recall of 1.2 million cases of cottage cheese after certain ingredients were not stored at a safe temperature at a manufacturing plant in Tulare, California.

Kraft said though the recall was precautionary, there was still a chance the improper storage could have created conditions which increase the likelihood of food-borne illness. Product affected had only been shipped to within U.S. stores.

The company said it is currently investigating only one complaint of illness from a batch of the cheese. Customers with affected products can be exchanged or refunded at the store of purchase.

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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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

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.
  • 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 12.5% when compared to the same quarter one year prior, going from $456.00 million to $513.00 million.
  • 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. 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 1.88 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 0.76, which illustrates the inability to avoid short-term cash problems.
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