Analysis of Kraft Foods Inc. Essay Example
Analysis of Kraft Foods Inc.
Executive Summary
The following report is an evaluation of Kraft Foods Inc. from both an internal and external perspective using fundamental and technical analysis. Kraft Foods Inc. is a worldwide food company operating within the Packaged Foods industry. With annual revenues in excess of $49 billion they are the second largest firm in the industry, controlling 8% of the total market.
Fundamental analysis reveals that Kraft is a healthy company with growing revenues, and increasing margins. Technical analysis confirms much of what can be seen from a fundamental perspective but expands on it to show that Kraft is heavily debt financed and operates at a risky level of liquidity, which could be troublesome should they continue their aggressive strategy of growth through acquisitions.
From a financial perspective it can be seen that Kraft’s share price was affected quite heavily by the financial crisis, where their share price hit an all time low of $21. Since then they have recovered strongly and throughout the crisis they recorded increasing earnings per share as well as return on equity.
Comparing Kraft to its competitors reveals that they struggle to create as much value from their raw materials as some other companies in their industry do. They are also much less liquid than the industry leaders, Nestle. One thing they do very well is turnover their inventory, doing so nearly seven times per year.
Through this analysis both internally and externally it can be seen that Kraft performs strongly as a company. In certain categories they are leaders in their industry and have grown rapidly in recent years. They face stiff competition from other players in the industry however, and it is recommended that they slow their aggressive growth strategy in the short term to focus on reducing costs to improve current margins.
Introduction
Kraft Food Inc. is an American confectionery, food and beverage conglomerate,
Executive Summary
The following report is an evaluation of Kraft Foods Inc. from both an internal and external perspective using fundamental and technical analysis. Kraft Foods Inc. is a worldwide food company operating within the Packaged Foods industry. With annual revenues in excess of $49 billion they are the second largest firm in the industry, controlling 8% of the total market.
Fundamental analysis reveals that Kraft is a healthy company with growing revenues, and increasing margins. Technical analysis confirms much of what can be seen from a fundamental perspective but expands on it to show that Kraft is heavily debt financed and operates at a risky level of liquidity, which could be troublesome should they continue their aggressive strategy of growth through acquisitions.
From a financial perspective it can be seen that Kraft’s share price was affected quite heavily by the financial crisis, where their share price hit an all time low of $21. Since then they have recovered strongly and throughout the crisis they recorded increasing earnings per share as well as return on equity.
Comparing Kraft to its competitors reveals that they struggle to create as much value from their raw materials as some other companies in their industry do. They are also much less liquid than the industry leaders, Nestle. One thing they do very well is turnover their inventory, doing so nearly seven times per year.
Through this analysis both internally and externally it can be seen that Kraft performs strongly as a company. In certain categories they are leaders in their industry and have grown rapidly in recent years. They face stiff competition from other players in the industry however, and it is recommended that they slow their aggressive growth strategy in the short term to focus on reducing costs to improve current margins.
Introduction
Kraft Food Inc. is an American confectionery, food and beverage conglomerate,