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Stock of the Week:

Kraft Foods Inc. (KFT) Navellier's Stock Report

Fundamental GrowthGrade: C

Kraft Foods Inc. (KFT), the international conglomerate and maker of such iconic food brands as Ritz crackers and Oreo cookies, is one of the best-known food companies in the world. I don't know an American family that hasn't purchased one of this company's brand-name products. This year, the company has worked hard to improve its margins, especially in Europe (where it successfully completed the purchase of British candy maker Cadbury) and strived to lower expenses. However, weak sales in the United States the company's overall sales. In evaluating KFT's fundamentals, my screens give the company a C rating, an average score.

NEXT: Sales Growth Grade »

Sales GrowthGrade: B

Kraft's second-quarter net sales were $12.25 billion, up an excellent 25% from the $9.78 billion it recorded during the same period in 2009. Sales for the food giant are up substantially and my evaluation screens have assigned a B grade for sales growth–a good score. However, KFT faces intense competition in the consumer foods segment. In fact, sales for the company in the United States are beginning to level off but are being offset by respectable growth in Europe for the company's brands. Additionally, Kraft's sales will be helped in the coming quarters as a result of its successful and hard-fought acquisition of Britain's legendary Cadbury chocolate company.

NEXT: Earnings Growth Grade »

Earnings GrowthGrade: C

KFT posted second-quarter net earnings of $937 million, or $0.60 per share, compared with $827 million, or $0.56 per share, for the same period in 2009, a 13% increase. Analysts were expecting earnings per share of $0.52, so this result beat Wall Street's expectations and provided a 15% earnings surprise. While the company met my earnings expectations, Kraft continues to face intense competition where margins already are razor thin. And with the economy slowing down, my evaluation screens assign only an average C grade for earnings growth for this multinational food conglomerate.

NEXT: Quantitative Grade »

Quantitative GradeGrade: B

My evaluation screens assign Kraft a Quantitative score of B–an above average score. The Quant. score is the most powerful of my ratings variables and indicates that the short- to mid-term buying pressure on this stock is good. Analysts are expecting earnings per share for this blue chip giant of $0.48 in the third quarter of this year and $0.46 in the fourth quarter. The reason for the dip is the expected slowdown in the economy as we head into the last quarter of this year and the predicted deceleration of the stock market. Kraft has a market capitalization of $51.31 billion.

NEXT: Total Grade »

Total GradeGrade: B

My proprietary analysis of Kraft Foods Inc.'s (KFT) stock results in a total grade of B–another good rating. While the company's products remain some of the most diverse and well-known in the marketplace, KFT faces intense competition with little room to increase its prices and, hence, its income. And as the economy slows, sales and earnings pressures certainly will mount on this Illinois-based company. Still, the company has excellent brands. If you have money that you are looking to invest, KFT should be on your list. I will continue to monitor this competitive consumer sector and should marketplace conditions change, I will adjust my ratings for the Oreo cookie maker.

NEXT: Fundamental Grade »

See Full Stock Report »

Special Feature:

What Will Companies Do With Their Big Earnings?

Cash has always been king, but in this market it is also becoming king maker. You see, big corporations are flush with cash right now and they're using all their money to buy up small, rival companies.

For many of the small-cap companies that I follow this could spell huge profits if a big company in their industry takes notice of them. The bidding war that's happening now between Dell and HP over 3Par could potentially play out for many other small companies on the market. However to reap the benefits of such a merger, you have to know where all this cash is headed. That's precisely what I want to talk about in today's issue of What's Working on Wall Street Now.

Continue reading.

We Want to Hear from You

August 9, 2010

Where are interest rates heading from here?

Both the Bank of England and the European Central Bank (ECB) kept their key interest rates unchanged as low rates are good for business. Do you think the U.S. will also continue to hold rates or do you think the Federal Reserve will raise rates soon?

  • I'm very confident that the Federal Reserve will keep rates low. They have no choice.
  • I think that inflation could become a problem which will lift interest rates and am adjusting my investing strategies accordingly.
  • I don't pay attention to interest rates. I pay attention to a company's fundamentals when deciding where to invest my money.
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Stock of the Week: Kraft Foods Inc. (KFT)
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