Kraft Foods – Stock Investing Analysis
Here’s a brief analysis on Kraft Foods stock. They have not been performing well, neither as a company nor as a stock. If you have them in your portfolio, I would consider the following very carefully. This may be just stock market basics to you, but if they’re not, it’s worth listening to.
First of all, their earnings look okay. They have steadily gone from $2.6 billion in net income in 2007 to $4.4 billion in 2010. That is a decent upward trend. My concern is that I’m not sure it warrants a 20 price to earnings multiple. This is especially the case for a large cap stock like this one.
My other concern is that their debt to equity ratio has steadily gone up. Their long term debt is risen from $18 billion in 2008 and 2009 to $26 billion in 2010. Their return on assets and equity is on the decline as well.
Again, there aren’t any huge warning signs. It’s just that I don’t know that their earnings growth and balance sheet warrants a $38 share price.
Tags: stock market basics