Will Kraft Foods Beat Earnings in 1Q13? - Analyst Blog
29 Aprile 2013 - 6:10PM
Zacks
Kraft Foods Group (KRFT) is set to report its
first-quarter fiscal 2013 results on May 2 after the market closes.
Last quarter, it posted a 90% positive surprise. Let’s see how
things are shaping up for this announcement.
Kraft Foods Group was spun off from Kraft Foods, Inc into an
independent company last year in October. Kraft Foods Group
includes the North American grocery business of the old Kraft Foods
which has been renamed to Mondelez International
(MDLZ), but now comprises only its global snacks business.
Factors to Consider This Quarter
The top line was quite weak in the fourth quarter due to the
difficult year-ago comparisons and volume declines (due to retailer
inventory shifts and more product pruning). Kraft Foods was not
much successful in raising prices either.
Management is not too bullish for the first quarter of 2013 as
well given the difficult year-ago comparison which included some
price increases that are not expected to be repeated in this
quarter. Moreover, management does not expect a full recovery from
the consumption declines seen in the fourth quarter of 2012.
However, like the fourth quarter of 2012, the first quarter’s
profits could see tailwinds from strong productivity gains and cost
savings which can partially offset headwinds from the sluggish top
line.
Earnings Whispers?
Our proven model does not conclusively show that Kraft Foods is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A
Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen.
That is not the case here, as you will see below.
Zacks ESP: The Zacks ESP is 0.0%.
Zacks Rank #2 (Buy): Kraft Foods carries a
Zacks Rank#2 (Buy). However the Zacks #2 Rank when combined with a
0.0% ESP makes surprise prediction difficult. We caution against
stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into
the earnings announcement.
Other Stocks to Consider
Here are some other food companies you may want to consider, as
our model shows they have the right combination of elements to post
an earnings beat this quarter:
Flower Foods Inc. (FLO), with Earnings ESP of
+14.63% and a Zacks Rank #1 (Strong Buy).
J&J Snack Foods Corp. (JJSF), with Earnings
ESP of +9.84% and a Zacks Rank #2 (Buy).
FLOWERS FOODS (FLO): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
KRAFT FOODS GRP (KRFT): Free Stock Analysis Report
MONDELEZ INTL (MDLZ): Free Stock Analysis Report
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