Blog > Gold and Resources > Blog article: Food Fight: Kraft (KFT) Vs. Hormel (HRL)
 | Email This Article Email This Article  | 

Food Fight: Kraft (KFT) Vs. Hormel (HRL)

Posted July 24, 2008

“The soaring costs of corn, wheat and oil have raised their costs painfully. The cereal makers intend to raise prices again, which may result in more dollars to the sales column of future earnings reports but not necessarily to better earnings or, most importantly, better profitability.” — Lynn Carpenter

Blogger’s note: Rising grain and fuel costs are cutting into the profit margins of food companies. Can higher prices at Kraft (KFT:NYSE) offset its increasing costs? Or will the strategy of appealing to lower incomes over at Hormel (HRL:NYSE) make the company a winner? Lynn Carpenter of Investor’s Daily Edge shares her perspective on the food industry and lets you know where you should look for gains in the current market.

by Lynn Carpenter

Baltimore — (TFN):  As an example of how the improving net margin separates winning companies from those getting along OK or worse, there’s no better place to look than the food companies.

For many of them, the soaring costs of corn, wheat and oil have raised their costs painfully. The cereal makers intend to raise prices again, which may result in more dollars to the sales column of future earnings reports but not necessarily to better earnings or, most importantly, better profitability.

~~~~~~~~~~~~~~~ Special Offer ~~~~~~~~~~~~~~~~~

Receive your FREE subscription to Investor’s Daily Edge today!

Investor’s Daily Edge is a free investment newsletter that’s delivered by email before the market opens. In each weekday issue you’ll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money – whether the market is rising or falling.

Investor’s Daily Edge is written by a select group of market experts, each with their own style of investing. So whether you are a long-term investor, a short term trader, or a prudent speculator, you can count on useful advice you can take to the bank. Sign up today and get our free ‘must read’ special report: Learning from a legend: How Warren Made His Billions.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Quarterly reports have millions, billions and thousands dancing across the charts of financial results, footnotes, interpretations…. But the basic idea is simple:

If you made 1,000 boxes of granola in your kitchen at a cost of $3 a box and sold them for $5 a box, you’re doing nicely. If your ingredients and fuel suddenly raise your cost to $4 a box, your profit margin is 50% lower. Read on to learn more.

****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. You can pick your favorite reader. Or if you prefer, you can have the feed delivered to your email.


Related Articles


Posted by Lynn Carpenter · Filed Under Gold and Resources 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus