(SLE) Sara Lee Corporation – Bear of the Day

We have downgraded the recommendation of Sara Lee Corp. (SLE) to Underperform from Neutral as the company remains under tremendous inflationary pressure, further burdened by severe competition from several branded and private label products. Though the company is making efforts to combat its rising price of coffee and meat by raising prices, we believe that the company has to sacrifice volume in the process.

The company is also undertaking strategic dis-investments to cope with higher expenses. The company is also planning to split itself into two businesses. However, we remain skeptical as the spin-off is subject to clearance from several regulations.

Though Sara Lee’s fourth quarter 2011 earnings of $0.20 was decently ahead of the year-ago period and was in-line with the Zacks Consensus Estimate, we do not see any solid ground which can hold the top lines to decent levels.

SARA LEE (SLE): Free Stock Analysis Report

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