Analysis of Kraft Foods Inc.
The following report is an evaluation of Kraft Foods Inc. from both an internal and external perspective using fundamental and technical analysis. Kraft Foods Inc. is a worldwide food company operating within the Packaged Foods industry. With annual revenues in excess of $49 billion they are the second largest firm in the industry, controlling 8% of the total market.
Fundamental analysis reveals that Kraft is a healthy company with growing revenues, and increasing margins. Technical analysis confirms much of what can be seen from a fundamental perspective but expands on it to show that Kraft is heavily debt financed and operates at a risky level of liquidity, which could be
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Measuring the aggregate size of the world’s food industry can be a difficult task, as Sarah Murray pointed out in a recent article for Forbes: “Euromonitor International reckons the packaged food industry--including everything from pasta and cooking oil to canned and frozen foods--is worth almost $1.6 trillion. Meanwhile, the World Bank puts the food and agriculture sector at 10% of global gross domestic product, which, taking the bank's 2006 estimate of about $48 trillion, would make the sector worth about $4.8 trillion” (2011). Whichever measuring technique is used, the consensus is the same: the world food industry is massive. By breaking the industry down into sub categories, such as Euromonitor did to come up with their figure, it is easier to get a picture of its size and scope. Kraft foods operates in the packaged food industry, alongside Unilever, Nestle, ConAgra and General Mills, just to name a few. Yahoo Finance places Kraft in the ‘Food – Major Diversified’ category and measures the size of the market to be roughly $780 billion. Using this figure compared to Kraft’s market cap of $64 billion shows that they carve out about 8% of the total market. An important trend to note regarding the world’s food industry is that it, along with the world’s population, is growing. It has been well documented that the world’s population has now broken through the