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Strength in Brand Portfolio Aids Kellogg (K), Rising Costs Ail
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Strength in brand portfolio, fueled by efforts to undertake innovation, is working well for Kellogg Company (K - Free Report) . The convenience food maker has been expanding its business through acquisitions. However, the company is not immune to the rising cost environment.
Let’s discuss this in detail.
Brand Strength & Acquisitions
Kellogg’s portfolio consists of strong brands such as Pringles, RXBAR, Bear Naked, Cheez-It, and Rice Krispies Treats, among many others. The company’s frozen foods brands, like Morningstar Farms and Eggo, have been aiding growth. On its second-quarter earnings call, management highlighted that Pringles's brand outperformed the salty snacks category.
The Zacks Rank #3 (Hold) company is dedicated to augmenting its portfolio by adding more products under existing brands, innovation and marketing initiatives. The company has been focused on investing in brand-building efforts. In this respect, it invests in digital media, consumer promotions and traditional advertising. Kellogg has also been enhancing its in-store capabilities, like increasing the sales force of its struggling businesses.
Kellogg acquired protein bar maker Chicago Bar Company in 2017. Chicago Bar Company makes RXBAR, considered one of the fastest-growing nutrition bar brands in the United States. The company’s Pringle's buyout has been lucrative. With the Pringles deal, Kellogg transformed itself from a large U.S. snacks business to a true global snacks player. Kellogg also continues to expand its acquired brands through new product introductions.
Image Source: Zacks Investment Research
Addressing the Hurdles
Kellogg has been seeing the adverse impacts of high input cost inflation and economy-wide hurdles and shortages to some extent. Kellogg’s SG&A expenses increased to $824 million during the quarter from $728 million reported in the year-ago quarter. As the company has resumed meetings and travel with businesses returning to pre-pandemic levels, we expect SG&A expenses to remain elevated. Apart from this, higher interest expenses weighed on Kellogg’s quarterly bottom line.
The company is on track with effective revenue growth management and productivity actions to counter the rising inflationary environment.
Kellogg’s shares have dropped 7.6% in the past three months compared with the industry’s decline of 5.4%.
Solid Staple Bets
Here, we have highlighted three top-ranked stocks, namely Post Holdings (POST - Free Report) , Utz Brands Inc. (UTZ - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Utz Brands manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 11.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.
The J. M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 14% on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year earnings suggests growth of 6.8% from the year-ago reported figure.
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Strength in Brand Portfolio Aids Kellogg (K), Rising Costs Ail
Strength in brand portfolio, fueled by efforts to undertake innovation, is working well for Kellogg Company (K - Free Report) . The convenience food maker has been expanding its business through acquisitions. However, the company is not immune to the rising cost environment.
Let’s discuss this in detail.
Brand Strength & Acquisitions
Kellogg’s portfolio consists of strong brands such as Pringles, RXBAR, Bear Naked, Cheez-It, and Rice Krispies Treats, among many others. The company’s frozen foods brands, like Morningstar Farms and Eggo, have been aiding growth. On its second-quarter earnings call, management highlighted that Pringles's brand outperformed the salty snacks category.
The Zacks Rank #3 (Hold) company is dedicated to augmenting its portfolio by adding more products under existing brands, innovation and marketing initiatives. The company has been focused on investing in brand-building efforts. In this respect, it invests in digital media, consumer promotions and traditional advertising. Kellogg has also been enhancing its in-store capabilities, like increasing the sales force of its struggling businesses.
Kellogg acquired protein bar maker Chicago Bar Company in 2017. Chicago Bar Company makes RXBAR, considered one of the fastest-growing nutrition bar brands in the United States. The company’s Pringle's buyout has been lucrative. With the Pringles deal, Kellogg transformed itself from a large U.S. snacks business to a true global snacks player. Kellogg also continues to expand its acquired brands through new product introductions.
Image Source: Zacks Investment Research
Addressing the Hurdles
Kellogg has been seeing the adverse impacts of high input cost inflation and economy-wide hurdles and shortages to some extent. Kellogg’s SG&A expenses increased to $824 million during the quarter from $728 million reported in the year-ago quarter. As the company has resumed meetings and travel with businesses returning to pre-pandemic levels, we expect SG&A expenses to remain elevated. Apart from this, higher interest expenses weighed on Kellogg’s quarterly bottom line.
The company is on track with effective revenue growth management and productivity actions to counter the rising inflationary environment.
Kellogg’s shares have dropped 7.6% in the past three months compared with the industry’s decline of 5.4%.
Solid Staple Bets
Here, we have highlighted three top-ranked stocks, namely Post Holdings (POST - Free Report) , Utz Brands Inc. (UTZ - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Utz Brands manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 11.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.
The J. M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 14% on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year earnings suggests growth of 6.8% from the year-ago reported figure.