Kraft Foods Inc. (NYSE: KFT) took its turn reporting earnings today, and it was yet another case of rising commodity costs impacting the bottom line at a food company. Third-quarter profit at the largest food and beverage manufacturer in the U.S. hit $596 million, or 38 cents per share, a 20% drop from year-ago results of $748 million, or 45 cents per share.

Company officials cited rising dairy costs, as well as investments in new products, as the primary reasons for this backslide. Kraft's cost of sales rose 14% while marketing and research expenses were 8% higher. Additionally, the year-ago time period had included a one-time gain of 9 cents per share, further impacting the year-over-year results.

The latest quarter did include various charges of 6 cents per share, some of which was related to asset impairments. Excluding these items, the maker of Nabisco, Oscar Mayer, and Post would have banked 44 cents per share, topping the Street's estimates by two pennies.

Costco (NASDAQ: COST) volatility flat into less than expected August same-store sales.

COST is recently down $3.21 to $58.40, over a 5% decline. Wachovia Securities says, "COST's 2% SSS gain for August trailed Street estimates of 5.3% and our 4-5% outlook." Wachovia Securities has an Outperform rating on COST. COST overall option implied volatility of 25 is near its 26-week average according to Track Data, suggesting non-directional fluctuations.

Kraft Foods (NYSE: KFT) volatility flat into 2007 financial progress remarks.

KFT is recently trading up $0.46 $32.61. KFT announced at a Lehman Brothers Back to School consumer conference that it remains confident in its 2007 outlook. Irene Rosenfeld, Chairman and CEO of KFT, also reported KFT remains on track to deliver $1 billion in savings from its total $3 billion, multi-year restructuring program. KFT overall option implied volatility of 25 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Kraft Foods Inc. (NYSE: KFT) was spun off by Altria Group Inc. (NYSE: MO) on March 30, into an independent company. In its first independent quarter, Kraft profits dropped 30% to $720 million. But this is far from the full story. Much of the decline in profits can be attributed to one time restructuring costs, and Kraft even managed to beat analyst expectations by a penny as revenues increased 5.7% to $8.6 billion for the quarter.

Now that it is an independent company, is the stock a good investment? I would argue that, in a few months, the $33 per share will seem like a bargain once the restructuring charges are recouped and the new market and product initiatives begin to gain traction.