The Associated Press is reporting that the Centers for Disease Control and Prevention (CDC) has downgraded obesity from the No. 2 cause of preventable death to No. 7. It's still lethal, but nowhere near as lethal as previously thought.
The big question now is will consumers misinterpret the news, and the CDC's 2010 goal to reduce the prevalence of obesity among adults, and load up on snack foods and other no-nos offered by the world's second-largest food and beverage company, Kraft Foods
Kraft has been one poor performing stock since Philip Morris, now Altria
But that earnings growth isn't as good as it seems, since most of it came from a reduction in impairment and restructuring charges: In other words, the company is simply suffering a little less than it did a year ago. Operating income declined due to higher commodity costs and other factors.
The company's top 25 U.S. categories have increased market share since 2004's second half. Sounds great, right? Exclude the impact of acquisitions, and the volume of product shipped between the 2004 first quarter and 2005's first quarter declined 0.3%. Yes, it is a tiny decline, but it loudly shouts that organic growth isn't happening.
So, the results are a mixed bag.
But, Kraft is restructuring and exiting businesses where it feels it has no competitive advantage. From the $1.5 billion sale of Altoids and Life Savers (among others) to Wrigley
Where's the silver lining? Take 2005 guidance, strip out the one-time restructuring charges to the tune of $0.22 a share, a $0.06 favorable tax treatment, and a $0.04 gain for the sales of businesses, and you've got estimated earnings of $1.85 to $1.90 a share. That prices the stock at roughly 16 times forward earnings, with a 2.6% dividend yield, and this is an industry leader at that. Given the company's focus on restructuring and increasing margins, the stock may finally (finally!) be able to shake its malaise and move ahead.
For those looking for much faster growth, although much lower margins, and healthy food offerings, take a look at Motley Fool Hidden Gems recommendation Fresh Del Monte Produce