Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Kraft Foods Group Inc (KRFT) Stock: An Earnings Preview

Kraft Foods Group Inc (NASDAQ:KRFT)Kraft Foods Group Inc (NASDAQ:KRFT) is set to report earnings after the market closes on Thursday. Here’s what you need to watch for in the company’s results.

The first issue that needs to be addressed is whether the food and beverage giant met Wall Street’s expectations. Analysts peg profits for Kraft at $0.66 per share this quarter. Kraft Foods Group Inc (NASDAQ:KRFT) booked earnings per share of $0.76 in the first quarter of this year. The maker of Oscar Mayer, Cool Whip, and Jell-O reported approximately $4.5 billion in Q1 2013 sales and $18 billion for the full-year 2012.

Organic growth
Kraft Foods Group Inc (NASDAQ:KRFT)’ organic net revenues increased 2.1% in Q1 2013 from the same period last year, driven mostly by volume gains from some of the company’s core brands, including Kool-Aid, Capri Sun, and Velveeta. Lower pricing tempered top-line growth. The company expects its full-year 2013 organic net revenue growth outlook to be in line with that of the North American food and beverage market.

Kraft Foods Group was formed in the October 2012 breakup of Kraft Foods Group Inc (NASDAQ:KRFT), when it was spun off from the parent company, which changed its name to Mondelez International Inc (NASDAQ:MDLZ). Mondelez International Inc (NASDAQ:MDLZ) took the high-growth global snack-food portfolio, while Kraft Foods received the more sluggish North American grocery business. Yet, since the corporate breakup, Kraft’s stock has returned more than 32% to shareholders, vastly outperforming Mondelez International Inc (NASDAQ:MDLZ), the consumer staples sector, and the overall stock market.

Results from profitability-boosting efforts
Since its spinoff, Kraft has renewed its focus on enhancing profitability by reformulating existing products, stepping up ad spend for core brands, and launching new product categories. For example, earlier this year, it rolled out a new marketing campaign to revitalize Grey Poupon, a brand that has struggled in recent years.

Confined to its North American market, Kraft Foods Group Inc (NASDAQ:KRFT) intends to operate a much leaner, productive, and cost-efficient organization. As a mature business, it is tempering its top-line growth expectations and instead enhancing profitability metrics like return on invested capital and free cash flow. The company expects $1 billion in free cash flow for the full-year 2013.

Foolish takeaway
When Kraft Foods Group Inc (NASDAQ:KRFT) releases its second-quarter results on Thursday, I’ll be watching to see exactly if and how the company achieved sales growth in its food and beverage businesses and whether the company is on track to meet its 2013 revenue estimate. I’ll also be looking for improvements to profitability as well as indications as to how it intends to expand these metrics in the coming quarters.

The article Kraft Stock: An Earnings Preview originally appeared on and is written by Nicole Seghetti.

Fool contributor Nicole Seghetti owns shares of Mondelez International. Follow her on Twitter @NicoleSeghetti. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.