Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Kellogg Company (K - Analyst Report) is set to report its second-quarter 2013 results on Aug 1, before the market opens. Last quarter, it reported in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Overall, the second quarter is expected to be somewhat similar to the first quarter. The first-quarter results were hurt by sluggishness in the U.S. snacks business, higher commodity costs and larger-than-expected currency headwinds. Accordingly, profits declined and the company delivered lower-than-expected top line.

During the second quarter, the softness in the U.S. snacks business is expected to continue. Thus, adjusted operating profit is expected to be relatively flat year over year in the quarter due to higher cost inflation, increased brand building investments to support innovation and softness in snacks.

Earnings Whisper

Our proven model does not conclusively show that Kellogg is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Positive Zacks ESP:  The Earnings ESP is 1.03%.

Zacks #4 Rank (Sell): Kellogg’s Zacks #4 Rank (Sell) lowers the predictive power of ESP because the Zacks #4 Rank, when combined with a positive ESP, makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

  • Sanderson Farms, Inc. (SAFM - Snapshot Report), Earnings ESP of +5.66% and a Zacks Rank #2 (Buy).
  • Tyson Foods, Inc. (TSN - Analyst Report), Earnings ESP of +8.62% and a Zacks Rank #2 (Buy).
  • Pilgrim's Pride Corp. (PPC - Snapshot Report), Earnings ESP of +3.57% and a Zacks Rank #2 (Buy)

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%