Earnings Preview: Kraft Foods

Kraft Foods (KFT) is expected to report Q3 earnings before market open Wednesday, October 29, with a conference call scheduled for 8:00 am.

Guidance

Analysts are looking for a profit of 43c on revenue of $10.42B. The consensus is 34c to 47c for EPS, and revenue of $9.98B to $10.76B, according to First Call. At September's Lehman Brothers 2008 Back-To-School Conference, Kraft forecast FY08 EPS of at least $1.88 vs. First Call consensus $1.90, which includes a 4c charge from exiting Post cereals in August, and net revenue growth of at least 6%. The company also forecast FY09 EPS growth of 7% to 9%, which includes a 3c impact from exiting Post cereals, and at least 4% organic revenue growth. In an effort to reduce costs, Kraft recently announced plans to cut 400 jobs in North America. As part of a separate restructuring plan, Kraft is also hoping to deliver cost savings of $1B per year.

Analyst Views

In an October note to clients Citigroup analyst David Driscoll said that food makers are expected to benefit from strong retail pricing and declining commodity costs. Merrill Lynch analyst Eric Serotta agreed, and on October 17 upgraded Kraft's shares to Buy from Neutral. Serotta says Kraft has shown better-than-expected progress on its turnaround plan, sees low-teens underlying EPS growth in 2009, and says his firm has "increased confidence" in management's execution ability.

Comments

[D-D:]

Kraft also has brand names. These brands over the LONG term will turn out to be lucrative for patient investors.
The trick is to buy KFT if and when it goes below 27.
RS
valuestockinvestors.bl.../

2008 Oct 29 12:42 PM