- Kellogg Company is a leading producer of ready-to-eat cereal that also sells snack and convenience foods such as cookies, crackers, potato chips, cereal bars, fruit snacks and frozen waffles.
- The company’s U.S. cereal business accounts for 40%-45% of sales. It has been performing poorly since 2012 due to sluggish growth and lower demand.
- Cereal weakness has spread to other developed countries like the U.K., Canada and Australia.
Kellogg Making Right Moves As Tough Conditions Will Challenge Near-Term Performance
- Company correctly making efforts to turn around core business.
- Challenging business conditions and large reinvestment needs will challenge near term performance.
- 2015 will be year of reinvestment and company should focus on stabilizing core business.
- Soft business conditions have weighed on stock valuations and resulted in valuation contraction.
- Kellogg company is seeing poor results in US Cereal and US Snacks.
- Despite poor revenue growth, the company may not see EPS decline.
- Kellogg's management has plans to return the company to growth over the next several years.
- Despite being the market leader, the company is facing headwinds in its cereal business which contributes nearly 23% of the total revenue.
- Top line pummeled by 2.10% in the third quarter of the fiscal year 2014. To revive demand for its products, the company continues to actively invest in category-building programs.
- The net profit margin shrinked by 271 basis points to reach 6.16% in the most recent quarter.
- Project K is being implemented which aims to achieve annual cost savings in the range of $425 million to $475 million by the fiscal year 2018.
- The stock represents an upside capital return potential of nearly 48%. Moreover, the company is also paying out an active dividend yield return of 1.18%.
- Kellogg's adjusted EPS beat consensus by $0.02.
- Kellogg's revenue is down 2.2% due to declines in the North American market.
- In my original article, I rated Kellogg as attractive with a good growth outlook.
- Kellogg's price is up from when my original article has been published; I rate Kellogg as a hold now.
Kellogg's Mixed Q3 Results Have Sent Shares Higher, Could The Rally Continue?
- Q3 earnings were released before the market opened on October 30.
- Earnings per share exceeded expectations, but revenue fell short.
- The stock has reacted by rallying higher.
- The stock currently yields about 3.1%.
- Kellogg’s share performance has been lackluster over the past few months. However, we believe this correction represents a buying opportunity for savvy investors.
- The company has an elaborate strategy to return to growth, which should result in share appreciation.
- Valuation is compelling considering its legacy as a company.
- Reported mixed Q2 earnings results in July.
- Q3 earnings are scheduled to be released on October 30.
- Analysts currently predict negative growth.
- The stock currently yields about 3.2%.
Kellogg Is A True Dividend Champion And Very Cheap
- Kellogg's business has hit a rough patch, but I believe it is transitory.
- Analyst sentiment has become very negative and driven the share price down.
- Kellogg is currently in deep value territory, and the high yield provides current income for patient shareholders.
After The Recent Pullback, Kellogg Is A Buy For Dividend Growth Investors
- Kellogg has high margins and returns on capital.
- Kellogg has a dividend yield of 3.2%, higher than it has been in the past two years.
- Management aligns the company to get back on the growth track.
Kellogg - Caution As Structural Headwinds And Leverage Limit Appeal
- Kellogg is not in favor with analysts, citing worries about growth, earnings and cost savings.
- I largely agree, having been cautious on the prospects for the shares for a longer time.
- Despite a 3% yield, appeal is not here yet with the risk-reward not being that attractive as operational risks appear to be increasing.
- Kellogg has a number of iconic brands. Pop-Tarts is a great example and has an impressive 80%+ share in the toaster pastries market thanks to strong advertising and innovation efforts.
- The firm's acquisition of Pringles continues to perform better than expected. Pringles' potato chip business gives Kellogg a solid growth engine in emerging markets.
- Evaluating the difference between price and value is key to any investment decision. Let's take a look at this relationship as it relates to Kellogg.
- With China set to become the world's largest food and beverage market in the world, this presents great opportunities to cereal companies such as Kellogg (K).
- The Chinese marketplace is a highly esoteric one in terms of branding; Kellogg may need to invest significantly in different branding and flavors to succeed in this market.
- While Kellogg has a significant presence in China with its current products and acquisition of the Pringles brand, a lack of innovation relative to competitors is concerning.
Kellogg Or General Mills For Your Retirement Portfolio?
- Kellogg and General Mills collectively own about three-fifths of the cereal aisle.
- Due to this staying power, each company has shown a great propensity to continuously reward shareholders.
- This commentary looks at which one might be a better investment opportunity today.
- Aggressive innovation efforts and advertisement spending will positively affect top-line growth.
- Project-K on track to delivering bottom-line growth in coming years.
- Efforts to expand in emerging markets and undertake strategic acquisitions will portend well for stock price.
Kellogg Is Finally Yielding Over 3% Again, But I'll Wait For A Further Pullback
- Since my most recent article on the company, shares in Kellogg have dropped by over 5%.
- The dividend has since been increased by $0.03, or 6.5%.
- K isn't as overvalued as it was a few months ago, but it's still trading slightly above 5-year average p/e and p/s ratios.
- I'll be buying the stock if and when it hits $60 in order to get a margin of safety.
- 78% of the US consumer base concurs that proteins are a fundamental balanced diet ingredient.
- Even the cereals that are marketed as healthy often have twice as much sugar as protein.
- Understanding the rising demand for healthier and convenient breakfasts, fast food restaurant chains such as McDonald’s and Tim Hortons started offering on-the-go coffees and breakfast sandwiches.
- Kellogg's management has announced that the company will have new products in its portfolio by the end of the current fiscal year.
- Kellogg's is considering expanding its operations by acquiring Bisco Misr, an Egyptian-based confectionery.
- K faces the challenge of a structural decline of its core cereal business due to a shift in consumer preference.
- A turnaround depends on 1) management acknowledging the structural shift of breakfast diet, 2) ramp up on effective marketing, 3) consolidate its current capacity and 4) pursue M&A.
- My bull-case values the company at $81 (+24% upside) and bear-case values it at $52 (-20% downside).
- After experiencing a significant decline in profits for the second time in a year Kellogg replaced the head of its U.S. morning foods division.
- This stock has gained just 7.58% in the last year and under-performed the S&P 500.
- If Kellogg hits its 52-week high then this will give rise to an upside potential of 7.25% which is in line with its last year gain.
Innovation Key To Future Performance As Kellogg Remains Challenged In Short TermEquity Watch • Aug. 27, 2014
- Top line growth remains weak due to slow growth in the cereal category.
- Product innovation initiatives and brand-building efforts will portend well for growth in the future.
- Performance might be challenged due to changes in consumer preferences and competition in the industry in the short term.
Wed, Jan. 21, 1:00 PM
- Dish Networks (DISH -0.2%) won a significant court battle in L.A. against Fox Broadcasting over the company's Dish Anywhere app.
- The ruling from a federal judge applied some of the principles from the Supreme Court's look at the Aereo case.
- The opinion from the court indicated that watching content on mobile devices and tablets through Dish Anywhere doesn't qualify as a breach of copyright law.
- The use of Dish's PrimeTime Anytime and AutoHop features were also deemed as fair use.
- Many programmers seemed to have anticipated the legal decision and already negotiated with Dish to disable ad-skipping for a period of time after a show airs.
- The ruling is sure to have been noticed on Madison Avenue where the largest (and smarter?) ad spenders continue to increase digital spending over broadcast/cable TV buys.
- Big advertisers: MCD, PG, BUD, WMT, TGT, K, GIS, TM, GM.
- Programmers: CBS, TWX, FOXA, SNI, AMCX, VIA , VIAB, DISCA.
Mon, Jan. 12, 10:45 AM
- Citigroup downgrades a number of food stocks on its view higher consumer spending in the sector may already by priced into share prices.
- Exposure to global markets also poses a risk due to currency swings and uneven demand, say analysts.
- The investment firm takes the rating on ConAgra (CAG -1%), Mondelez International (MDLZ -0.8%), and Kellogg (K -0.9%) to Neutral from Buy.
- McCormick & Company (MKC -0.8%), Kraft Foods Group (KRFT), and Campbell Soup (CPB) are all moved to Sell from Neutral.
Mon, Jan. 12, 3:23 AM
- After private equity firm Abraaj pulled its offer for Bisco Misr on Dec. 31, the bidding period for the Egyptian biscuitmaker ended Sunday with Kellogg (NYSE:K) as the only suitor.
- The bidding war between the two drove up the offer price by over 20%.
- As of yesterday, shareholders controlling 86% of the company have agreed to sell their shares to Kellogg for a total of $125M.
Dec. 31, 2014, 2:59 AM
- The UAE's Abraaj Investment Management is pulling out of a bidding war with Kellogg (NYSE:K) for the Egypt's Bisco Misr.
- Abraaj did not give a reason for its withdrawal from the bidding process, but said the orderly and transparent process had underlined growing investor interest in Egypt.
- Kellogg was the last to place a bid for the snack maker, offering 89.86 EGP per share - for a total purchase price of $144M.
Dec. 28, 2014, 11:01 AM
- Egypt's financial regulator has extended the bidding period for Bisco Misr until Jan. 11, intensifying a $144M takeover battle between Kellogg (NYSE:K) and the UAE's Abraaj Investment Management.
- Kellogg raised its bid for the Egyptian snack maker on Wednesday to 89.86 EGP per share following an earlier offer of 88.09 from Abraaj.
- The battle has so far driven up the bid price by more than a fifth from Abraaj's opening gambit of 73.91 EGP/share.
Dec. 18, 2014, 4:35 AM| Comment!
Dec. 17, 2014, 9:29 AM
- General Mills (NYSE:GIS) reported cereal demand fell off once again in FQ2.
- The decline is in spite of efforts to introduce more on-trend brands (protein, gluten-free, low-calorie).
- The company offset the cereal slump to a degree with gains in yogurt.
- Yogurt sales grew in both the U.S. Retail and Convenience Store channels.
- The shift by consumers from cereal to yogurt has also negatively impacted Kellogg (NYSE:K) and Post Holdings (NYSE:POST) - while benefiting Danone (OTCQX:DANOY) and Mueller-PepsiCo (NYSE:PEP).
- Previously: General Mills earnings, highlights
Dec. 12, 2014, 10:47 AM
- Kellogg (K -1.4%) says it's making an evaluation to see if it's operating the right number of ready-to-eat cereal manufacturing plants in the U.S.
- A report from the Bakery, Confectionary, Tobacco, and Grain Millers Association made the claim earlier this week that Kellogg planned to close some U.S. facilities.
Dec. 1, 2014, 10:16 AM
Nov. 30, 2014, 9:23 AM
- Intensifying a bidding war with the UAE's Abraaj Investment Management, Kellogg (NYSE:K) has raised its offer for Egyptian cake and biscuit maker Bisco Misr again.
- The world's biggest breakfast cereal maker upped its bid to 82.2 EGP ($11.50) per share today, topping Abraaj's previous offer of 80.58 EGP ($11.27).
- Earlier this month, Abraaj offered 73 EGP per share, which Kellogg countered last week with 79 EGP.
- Previously: Bisco Misr bidding war heats up
Nov. 26, 2014, 9:44 AM
- Abraaj has raised its bid for Bisco Misr to 80.58 EGP per share, announcing a $130M offer for the Egyptian cake and biscuit maker.
- The UAE investment company's initial bid of 73 EGP per share earlier this month was topped this morning by Kellogg's (K -0.5%) offer of 79 EGP/share.
- Previously: Kellogg makes offer for Egypt's Bisco Misr
Nov. 26, 2014, 6:40 AM| 1 Comment
Nov. 20, 2014, 9:12 AM
- Air fares rose 2.2% M/M in October, according to the underlying data from the Bureau of Labor Statistics. The development arrives just as jet fuel prices are moderating on forward contracts for carriers (LUV, JBLU, HA, ALK, ALGT, SAVE, AAL, DAL, UAL, RJET).
- Breakfast cereal prices rose 1.5% M/M in October. Though the gain could be due to a soft promotions-influenced comp from a year ago, sellers (GIS, K, POST) won't mind the relief.
- Another surprise might be the +4.3% average price rise in the women's dresses category. Ann (NYSE:ANN), L Brands (NYSE:LB), Cache (NASDAQ:CACH), Cato (NYSE:CATO), Chico's FAS (NYSE:CHS), and Ascena Retail (NASDAQ:ASNA) could be part of that improvement.
- BLS CPI table
Nov. 20, 2014, 6:55 AM
Oct. 30, 2014, 8:20 AM
- Kellogg (NYSE:K) reports sales in North America fell 4.2% Y/Y to $2.3B in Q3, while operating profit was 20% lower than the year-ago period.
- The company saw weakness in both the snacks and morning foods segments in the U.S.
- Cost of goods +3.6% to $2.35B.
- International revenue growth: Europe sales -0.6%, Latin America +6.2%, Asia/Pacific +4.8%.
- K -2.4% premarket.
Oct. 30, 2014, 8:05 AM
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