Competition
Kraft’s main industry peers are General Mills, Inc. (NYSE:GIS) and Kellogg Company (NYSE:K). General Mills is a manufacturer and marketer of branded consumer foods. General Mills, Inc. (NYSE:GIS) is a solid company with net sales of $17.8 billion. General Mills is a safe company for dividend investors. It has a very solid business model with a strong financial position. In the last year alone, it has returned $1.9 billion in cash to shareholders through dividends and its share repurchase program.
Recently, General Mills, Inc. (NYSE:GIS) announced fiscal 2013 results with 7% growth in the top line while its bottom line growth is high at 19%. Operating cash flow increased by 22% in the last year alone. On the other hand, it has a healthy balance sheet to support its business. General Mills is carrying a low debt-to-equity ratio of 0.9 with high current and quick ratios. On the whole, General Mills is a safe company for dividend investors.
Kellogg Company (NYSE:K) is also set for big profits with recent moves. Kellogg has taken a few key steps to strengthen its future prospects and financial situation. It has suspended its buyback program to penetrate new emerging markets and engage in debt reduction. To do this, Kellogg has acquired the Pringle business, which led it to achieve 12% growth in its top line. This purchase is also aiding it to more fully capture the snacks market.
On the other hand, it is looking to use remaining funds for debt reduction. Recently, Kellogg Company (NYSE:K)’s management made a smart move by removing high-interest debt. At the end of the last quarter, its balance sheet showed a heavy long-term debt of $9 billion that was refinanced at low rates. At the moment, its current ratio of 1 represents no sign of insolvency.
Final notes
Kraft Foods Group Inc (NASDAQ:KRFT) is a safe company for dividend investors. Its dividends look safe, as all of its business segments are generating increasing profits. Additionally, it is showing strong growth in new emerging markets with the launch of new products. Kraft’s management’s cost cutting measures led it to improve operating margins. Combined with solid brands and new innovations, it has a solid business model and strong management to generate hefty cash for share holders.
The article This Company Is Set For Big Profits originally appeared on Fool.com and is written by siraj sarwar.
siraj sarwar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. siraj is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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