Back to top

Analyst Blog

Kellogg Company (K - Analyst Report) recently reaffirmed its guidance for 2012 and also issued fresh outlook for 2013.

For 2012, Kellogg expects its organic net sales growth to be in a band of 2%–3%. Internal operating profit for 2012 is expected to decline in the range of 4%-6%, higher than prior expectations of 2%–4%. The organic revenue and operating profit guidance excludes the impact from the Pringles acquisition.

The world’s largest cereal maker expects its reported earnings per share to range between $3.18 and $3.30 in fiscal 2012. The guidance however includes impact from the Pringles acquisition and now the product recall costs.

For 2013, Kellogg expects net sales growth to be approximately 7%, while reported earnings are expected to grow between 5% and 7%.

Earlier this month, Kellogg had reported results for the third quarter. Earnings of 86 cents per share beat both the Zacks Consensus Estimate as well as the prior-year quarter earnings. Robust organic sales growth performance, which offset the headwinds from last month’s product recall (certain packages of Mini-Wheats cereals), led to the earnings outperformance.

Organically, revenues increased 2.8% in the quarter. Improving revenue trends in North America and strong performance of its Pringles business, acquired from Procter & Gamble (PG - Analyst Report) in June this year, drove the top-line growth in the quarter.

Our Recommendation

We currently have a long-term Neutral recommendation on Kellogg. However, the stock jumped to a Zacks #2 Rank (a short-term Hold rating) following significant positive estimate revisions after announcement of solid third quarter results.

We are optimistic about Kellogg’s solid brand positioning, its geographic diversity and cost-saving efforts, especially its supply-chain initiatives. Moreover, we are encouraged by the growth potential, diversification and international presence that the Pringles deal provides. However, its sluggish cereal business, challenges in Europe and rising input costs keep us on the sidelines

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

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
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%