Kraft Foods Earnings: Investors CHEER as Margins Expand and Net Income Rises

Falling revenue did not prevent S&P 500 (NYSE:SPY) component Kraft Foods Inc. (NYSE:KFT) from reporting a profit boost in the second quarter. Kraft Foods manufactures and markets packaged food products, including snacks, beverages, cheese, and convenient meals.

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Kraft Foods Inc. Earnings Cheat Sheet

Results: Net income for the food-miscellaneous/diversified rose to $1.03 billion (58 cents per share) vs. $976 million (55 cents per share) in the same quarter a year earlier. This marks a rise of 5.9% from the year-earlier quarter.

Revenue: Fell 4.3% to $13.29 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Kraft Foods Inc. fell short of the mean analyst estimate of 67 cents per share. Analysts were expecting revenue of $13.04 billion.

Quoting Management: “Our second quarter and first half results reflect the success of our brand-building investments over the past few years and the resilience of our businesses,” said Irene Rosenfeld, Chairman and CEO.

Key Stats:

The company has now seen its net income increase for three consecutive quarters. In the first quarter, net income rose 1.8% and in the fourth quarter of the last fiscal year, the figure rose 53.7%.

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 13.3%.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 57 cents versus a mean estimate of net income of 56 cents per share.

Gross margins grew to 36.7% last quarter, a 1.6 percentage points difference from the year-earlier quarter. This snaps a streak of two consecutive quarters of shrinking margins.

Looking Forward: The average estimate for the third quarter remains unchanged at 63 cents a share. The average estimate for the fiscal year is now $2.50 per share, down from $2.52 sixty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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