A strong top line, backed by sturdy brand portfolio, is favoring Kellogg Company (K - Free Report) . This Zacks Rank #2 (Buy) stock has rallied 21.2% in the past three months compared with the industry’s rise of 4.5%. Let’s take a closer look.
Kellogg boasts a robust brand portfolio, strengthened by prudent buyouts and innovations. In fact, the acquisition of Chicago Bar Company is yielding and has added the RXBAR brand to Kellogg’s portfolio. RXBAR is considered the fastest growing nutrition bar brand in the United States. Further, the company is benefiting from the consolidation of Multipro, a Nigerian food distributor. In the first and the second quarter of 2019, the consolidation of Multipro acted as the main revenue driver. Additionally, the buyout of Pringles has been profitable and enabled the company to become a global snacks player.
Markedly, these acquired businesses are expected to continue supporting its performance. Kellogg is also expanding acquired brands through innovation. Additionally, it focuses on boosting marketing capabilities and is investing in in-store capabilities.
This apart, Kellogg is on track with deploy for growth strategy and is accordingly undertaking efforts to restructure portfolio. In fact, organic sales growth witnessed during the second quarter indicates that the company’s strategy is yielding. As part of portfolio-restructuring efforts, it completed the sale of certain snacks, cookies, crusts and ice cream businesses. Kellogg is also rapidly building its business in the emerging markets of Asia, the Middle East and the African (AMEA) regions.
Such well-chalked strategies to develop a strong portfolio have bolstered Kellogg’s top line, which has been rising year on year. Apart from these, Kellogg’s productivity-saving initiatives are underway. In this context, it is striving to reduce overhead costs pertaining to Direct-Store Delivery in U.S. Snacks.
Wrapping up, such upsides are likely to continue driving the company’s performance and cushion headwinds like rising input costs and adverse currency fluctuations. That said, we expect Kellogg to maintain strong footing in the food space.
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Hershey (HSY - Free Report) presently has a Zacks Rank #2 (Buy) and long-term earnings growth rate of 7.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Procter & Gamble (PG - Free Report) , with a Zacks Rank #2, has long-term earnings growth rate of 7.1%.
The Estee Lauder Companies (EL - Free Report) , with long-term earnings growth rate of 12.7%, carries a Zacks Rank #2.
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