NEW YORK (TheStreet) -- Shares of Kraft Foods Group (KRFT) are jumping, higher by 5.67% to $62.94 on heavy trading volume Thursday, after the maker of Jell-O desserts and Velveeta cheese announced that CEO Tony Vernon would retire later this month, with chairman John Cahill replacing him as the company struggles with sluggish demand for packaged food products in the U.S., Reuters reports.
JPMorgan Chase analysts said the CEO change could mean a shift in strategy with possibilities ranging from divestitures of weaker brands to a sale of the company to a private equity firm, according to Reuters.
Cahill joined Kraft in 2012 as executive chairman after working as chairman and CEO of Pepsi Bottling (PEP) .
Northfield, IL-based Kraft operates food and beverage businesses in North America, making beverage products, convenient meals, cheese and other grocery products.
About 6.71 million shares of Kraft have traded hands as of 3:29 p.m. ET, compared to its average trading volume of 2.54 million shares a day.
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 a few notable strengths, 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 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 0.1%. 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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 10.8% 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 30.5% in earnings ($3.14 versus $4.51).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food Products industry average. The net income has decreased by 10.8% when compared to the same quarter one year ago, dropping from $500.00 million to $446.00 million.
- You can view the full analysis from the report here: KRFT Ratings Report