* Kraft likely to beat Q1 earnings estimates
* Kraft growing sales, volumes faster than peers
* Cuts TreeHouse to neutral from overweight
April 30 (Reuters) – Kraft Foods Inc, North
America’s largest packaged food maker, is likely to beat market
estimates for first-quarter earnings, J.P. Morgan Securities
said, raising its rating on the company to “overweight” from
“neutral.”
Kraft, maker of Oreo cookies, Cadbury chocolate and Maxwell
House coffee, has been growing sales and volumes faster than its
peers, JP Morgan analysts led by Ken Goldman said, citing
Nielsen data.
They expect Kraft to report a first-quarter profit of 59
cents per share, 3 cents above the average analysts’ estimate,
according to Thomson Reuters I/B/E/S.
JP Morgan’s Goldman is a four-star rated analyst for the
accuracy of his earnings estimates on Kraft Foods, according to
Thomson Reuters StarMine.
JP Morgan analysts also expect Kraft’s grocery company, to
be spun off later this year, to be able to pay over 60 percent
of its free cash flow toward dividends and still have between
$500 million to $1 billion left to repay debt.
“We think (the grocery company’s dividend) yield could
attract income investors and lead to a better price/earnings
multiple than most domestic, slower-growth companies typically
receive,” the analysts said in a client note.
Kraft, scheduled to report quarterly earnings on Thursday,
announced a move to spin off its grocery business from its
snacks unit last August. {ID:nL3E7J42PN]
JP Morgan also cut its rating on private label food maker
TreeHouse Foods Inc to “neutral” from “overweight”
saying that the warmer-than-expected winter in the United States
might have hurt demand for many of the company’s products like
condensed soup and powdered creamers.
However, the analysts said TreeHouse may still be an
attractive stock over the longer term as private label companies
would continue to take market share away from branded companies.
