Kellogg Company (K) has a balanced portfolio of cereal and snack products. Popular brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Ready Crust and Kashi.
Kellogg is known for its solid brand positioning, geographic diversity and significant investments in innovation. Moreover, its re-structuring program – Project K lends support to brand-building investments for driving demand.
However, Kellogg has reported weak sales results in all the quarters of 2014 due to soft volumes in the U.S. cereals and snacks businesses. We believe it is difficult for the company to achieve growth in 2015 given the combination of weak sales trends and reinvestments in the business.
Investors should also note the recent earnings estimate revisions for K, as the consensus estimate has been moving lower. However, K has a decent history in earnings season. K has delivered positive earnings for three out of the past four quarters, making for an average earnings surprise of 1.61%.
Currently, K has a Zacks Rank #4 (Sell), but that could definitely change following Kellogg’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: K missed on earnings. Our consensus earnings estimate called for EPS of 92 cents/share, and the company reported adjusted EPS of 84 cents instead. Investors should note that these figures take out stock option expenses.
Revenues: K reported revenues of $3.51 billion. This missed our consensus estimate of $3.65 billion.
Key Stats to Note: Organic revenues (excluding the impact of acquisitions, dispositions, foreign exchange and difference in shipping days) declined 2.2% due to another quarter of soft sales in the U.S.
Stock Price: Shares declined around 3% in pre-market trading.
Check back later for our full write up on this K earnings report later!
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