Q4 Preview: There's Always Room for Kraft (KFT)
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Kraft Foods Inc. (NYSE: KFT) is lower today, ahead of the company's fourth quarter 2010 earnings report, expected out after the market closes. The stock is down 0.96%.
KFT is expected to report EPS of $0.46 on revs of $13.47 billion. Last quarter, the Northfield, IL-based consumables company posted EPS of $0.47 with revs of $11.6 billion, compared to the consensus EPS of $0.46 and revs of $12.01 billion. Looking at Q409, we see that Kraft produced EPS of $0.48 on revs of $11 billion, mixed to the consensus EPS of $0.45 and revs of $11.07 billion.
Shares gained 1.9% through the quarter, to $31.51 at the end of December. The stock is down just 1.6% since the end of the quarter, but finished out 2010 about 19.3% stronger.
A simple valuation puts Kraft with a forward P/E of 13.4x FY11 EPS estimates, compared to
Data from Bloomberg has 17 analysts with a Buy on KFT, 7 with a hold, and none suggesting to Sell. The analyst price target average is $34.50, with a high of $40 and low of $30. Shares have traded in a range of $32.67 - $27.49 over the last 52-weeks.
Summary
Kraft is looking for FY10 EPS of at least $2.00.
Deutsche Bank is looking for operating EPS of $0.46 with $13.3 billion in revs. Operating margins should decline 80 basis points to 12.1%, compared to Q409, but gross margins should improve 30 bps to 37.2%.
They note that the stock has underperformed the S&P 500 and S&P Food Products index (-2.6% versus 9.1% and 2.1%, respectively). Investors may be concerned with "mixed trends in the company’s core business, a confectionery category (namely gum) that is not growing at the expected rate, and ongoing commodity cost pressure that looks to affect margins across the business."
Questions to consider include: Performance in key U.S. categories, what pricing does Kraft expect to take in total, have competitors followed in pricing actions, what's the performance of Cadbury's categories globally, and what is the updated outlook for inflation in FY11 and beyond?
DB rates Kraft a Hold, with a $30 price target.
Kraft announced price increases on coffee in August and December, and with a lost Starbucks (Nasdaq: SBUX) contract, many will be wondering whether or not market share can be sustained against rival Smucker (NYSE: SJM).
Investors may also want to know about how plans for expansion in Europe and emerging markets is faring. Last quarter, Kraft saw a 57.3% increase in European operating income and 29.8% jump in emerging markets operating income (all on a GAAP basis). Both were big numbers, but total income in the two regions still accounts for less than half of all operating income. Grow in North America was 4.8% last quarter.
Kraft is expected to release their Q410 earnings on Tuesday, February 10, 2011, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
KFT is expected to report EPS of $0.46 on revs of $13.47 billion. Last quarter, the Northfield, IL-based consumables company posted EPS of $0.47 with revs of $11.6 billion, compared to the consensus EPS of $0.46 and revs of $12.01 billion. Looking at Q409, we see that Kraft produced EPS of $0.48 on revs of $11 billion, mixed to the consensus EPS of $0.45 and revs of $11.07 billion.
Shares gained 1.9% through the quarter, to $31.51 at the end of December. The stock is down just 1.6% since the end of the quarter, but finished out 2010 about 19.3% stronger.
A simple valuation puts Kraft with a forward P/E of 13.4x FY11 EPS estimates, compared to
Data from Bloomberg has 17 analysts with a Buy on KFT, 7 with a hold, and none suggesting to Sell. The analyst price target average is $34.50, with a high of $40 and low of $30. Shares have traded in a range of $32.67 - $27.49 over the last 52-weeks.
Summary
Kraft is looking for FY10 EPS of at least $2.00.
Deutsche Bank is looking for operating EPS of $0.46 with $13.3 billion in revs. Operating margins should decline 80 basis points to 12.1%, compared to Q409, but gross margins should improve 30 bps to 37.2%.
They note that the stock has underperformed the S&P 500 and S&P Food Products index (-2.6% versus 9.1% and 2.1%, respectively). Investors may be concerned with "mixed trends in the company’s core business, a confectionery category (namely gum) that is not growing at the expected rate, and ongoing commodity cost pressure that looks to affect margins across the business."
Questions to consider include: Performance in key U.S. categories, what pricing does Kraft expect to take in total, have competitors followed in pricing actions, what's the performance of Cadbury's categories globally, and what is the updated outlook for inflation in FY11 and beyond?
DB rates Kraft a Hold, with a $30 price target.
Kraft announced price increases on coffee in August and December, and with a lost Starbucks (Nasdaq: SBUX) contract, many will be wondering whether or not market share can be sustained against rival Smucker (NYSE: SJM).
Investors may also want to know about how plans for expansion in Europe and emerging markets is faring. Last quarter, Kraft saw a 57.3% increase in European operating income and 29.8% jump in emerging markets operating income (all on a GAAP basis). Both were big numbers, but total income in the two regions still accounts for less than half of all operating income. Grow in North America was 4.8% last quarter.
Kraft is expected to release their Q410 earnings on Tuesday, February 10, 2011, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
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