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Factors Setting the Stage for Kellogg's (K) Q4 Earnings

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Kellogg Company (K - Free Report) is scheduled to release fourth-quarter 2019 results on Feb 6. This renowned convenience food provider has trailing four-quarter positive earnings surprise of 7.9%, on average. Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Which way are Estimates Headed?

The Zacks Consensus Estimate for fourth-quarter 2019 earnings is pegged at 86 cents per share, which suggests a decline of 5.5% from the year-ago quarter’s reported figure. Nevertheless, the projection has moved up by a penny in the past 30 days. The consensus mark for revenues is pegged at $3,198 million, which indicates a decline of 3.6% from the prior-year quarter’s figure.

For 2019, the Zacks Consensus Estimate is pegged at $3.89 per share that suggests a decline of 10.2% from the year-ago figure. The consensus mark for 2019 sales is pegged at $13,553 million.

Kellogg Company Price and EPS Surprise

 

Kellogg Company Price and EPS Surprise

Kellogg Company price-eps-surprise | Kellogg Company Quote


Factors at Play

Kellogg has been focused on undertaking efforts to restructure its portfolio. In this regard, the company completed the sale of its cookies, fruit snacks, pie crust and ice cream cones businesses in July 2019. However, the divestiture has been hurting the company’s performance. In fact, during the last earnings call, management guided adjusted earnings decline of 10% (at cc) in 2019. Further, Kellogg anticipates adjusted operating profit (at cc) decline of 4-5% in the same time period. Apart from this, the company has been struggling with higher input costs. Additionally, volatile currency movement is a concern.

Nevertheless, Kellogg has been gaining from investment in Nigeria-based food distributor — Multipro — that has been contributing to its top-line for more than a year. Also, the company’s top line has been benefiting from the acquisition of renowned nutrition bar brand, RXBAR (completed in 2017). Pringles brand has also been a key driver for Kellogg. .

Further, Kellogg’s focus to augment its portfolio through product launches, innovation and marketing initiatives bodes well. Also, the company has been investing in in-store capabilities like increasing the sales forces of its struggling businesses like cereals. Notably, management expects 1-2% organic sales growth for 2019.

What the Zacks Model Unveils?

Our proven model does not conclusively predict an earnings beat for Kellogg this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kellogg carries a Zacks Rank #2 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Post Holdings, Inc. (POST - Free Report) presently has an Earnings ESP of +5.47% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Hain Celestial Group, Inc. (HAIN - Free Report) currently has an Earnings ESP of +5.26% and a Zacks Rank #2.

Campbell Soup Company (CPB - Free Report) has an Earnings ESP of +3.34% and a Zacks Rank #2.

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