Starting with the good news: Third-quarter EPS more than doubled on the back of a whopping $0.57-per-share gain from the sale of the Post cereal business. But investors who know the consumer products companies look for EPS before unusual items, which for Kraft was $0.44 -- equal to last year, and a penny better than consensus analyst expectations. The company strongly reiterated both 2008 and 2009 earnings guidance.
For me, the disappointing news was that case volume remains stuck at a 1% decline, the same result that Kraft reported last quarter. Beverages volume is growing nicely (over 3%), but cheese and snack products volume continue to slide at a mid-single-digit rate. I took Kimberly-Clark
The big question is whether stretched consumers will trade down from higher priced branded products to generic store brands. CEO Irene Rosenfeld addressed this head-on in the conference call, saying that commodity-related price increases are over at Kraft -- at least for the time being. She also noted that consumers are trending toward made-at-home meals and value offerings, which she expects will benefit the company.
I must admit to not being completely impartial, as I own Kraft shares, but I think there's some meat to this argument. I also like the idea that with commodity prices coming off their peaks this past summer, food companies like Kraft, General Mills
I've been nibbling at Kraft ever since Warren Buffett took a big stake in the summer of 2007. This year, the stock is down 10% -- not up to typical Berkshire Hathaway
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