Kraft Foods Group (KRFT) vs. Kellogg (K) Critical Review

Kellogg (NYSE: K) and Kraft Foods Group (NASDAQ:KRFT) are both consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitabiliy, risk, analyst recommendations, institutional ownership, dividends and earnings.

Profitability

This table compares Kellogg and Kraft Foods Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kellogg 6.07% 67.99% 9.05%
Kraft Foods Group 9.86% 38.66% 7.47%

Valuation and Earnings

This table compares Kellogg and Kraft Foods Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kellogg $12.87 billion 1.82 $2.26 billion $2.20 30.34
Kraft Foods Group N/A N/A N/A N/A N/A

Kellogg has higher revenue and earnings than Kraft Foods Group.

Dividends

Kellogg pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. Kraft Foods Group does not pay a dividend. Kellogg pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kellogg has increased its dividend for 12 consecutive years.

Institutional & Insider Ownership

83.3% of Kellogg shares are owned by institutional investors. 1.3% of Kellogg shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Kellogg and Kraft Foods Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kellogg 1 8 2 0 2.09
Kraft Foods Group 0 0 0 0 N/A

Kellogg presently has a consensus target price of $79.40, indicating a potential upside of 18.95%. Given Kellogg’s higher probable upside, research analysts plainly believe Kellogg is more favorable than Kraft Foods Group.

Summary

Kellogg beats Kraft Foods Group on 9 of the 11 factors compared between the two stocks.

Kellogg Company Profile

Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Its segments include U.S. Morning Foods, which includes cereal, toaster pastries, health and wellness bars, and beverages; U.S. Snacks, which includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks; U.S. Specialty, which represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing; North America Other, which includes the U.S. Frozen, Kashi and Canada operating segments; Europe, which consists of European countries; Latin America, which consists of Central and South America and includes Mexico, and Asia Pacific, which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

Kraft Foods Group Company Profile

Kraft Foods Group, Inc. is a consumer packaged food and beverage company. The Company manufactures and markets food and beverage products, including cheese, meats, refreshment beverages, coffee, packaged dinners, refrigerated meals, snack nuts, dressings, and other grocery products, primarily in the United States and Canada. Its product categories span breakfast, lunch and dinner meal occasions. The Company operates in six segments: Cheese, Refrigerated Meals, Beverages, Meals & Desserts, Enhancers & Snack Nuts and Canada. Its brand portfolio consists of various food brands in North America, including Kraft cheeses, dinners and dressings; Oscar Mayer meats; Philadelphia cream cheese, and over 25 other brands. The Company operates around 36 manufacturing and processing facilities, 34 in the United States and two in Canada. It sells products to supermarket chains, wholesalers, supercenters, club stores, distributors and convenience stores, among others.

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