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What Drove Kellogg’s Better-than-Expected 1Q17 Results?

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Part 6
What Drove Kellogg’s Better-than-Expected 1Q17 Results? PART 6 OF 6

How Kellogg Stacks Up against Peers

Ratings and target price summary

The majority of analysts covering Kellogg (K) remain neutral on the stock, given the industry-wide slowdown. The consensus rating on Kellogg stock is a 3.0 on a scale of 1.0 (strong buy) to 5.0 (strong sell). Of the 19 analysts covering Kellogg, 10% rated it as a “buy” on May 5, 2017. 74% of analysts rated the company a “hold,” and 16.0% rated it a “sell.” On the same day, Kellogg was trading at $70.69, 9.3% below analysts’ 12-month price target of $77.25 per share.

How Kellogg Stacks Up against Peers

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Peer comparison

The majority of analysts covering Mondelēz (MDLZ) remain positive on the stock. About 76.0% have recommended a “buy” on the stock, and 24.0% have recommended a “hold.” For Kraft Heinz (KHC) stock, 75% rated it as a “buy,” and 25% have rated it as a “hold.”

Of the 19 analysts covering General Mills (GIS), 11.0% of the 19 analysts have rated it as a “buy,” and 68.0% have rated it as a “hold.” About 21.0% have rated it as a “sell.” As for Conagra (CAG), 65% of analysts have rated the stock as a “buy,” ~21% have rated it as a “hold,” and 14% have rated it as a “sell.”

Valuation summary

On May 5, 2017, Kellogg was trading at a 12-month forward PE (price-to-earnings ratio) of 18.0x, which is below the S&P 500 Consumer Staples Index’s forward PE of 21.3x and the S&P 500’s (SPX) forward PE of 18.7x. The company’s current valuation is also lower than the peer average of 20.8x.

On May 5, General Mills, Conagra Brands, and Mondelēz International were trading at forward PEs of 17.7x, 17.8x, and 20.7x, respectively. You can get indirect exposure to Kellogg through ETFs such as the Consumer Staples Select Sector SPDR ETF (XLP), which invests 1.1% of its portfolio in the company.

For more updates, visit Market Realist’s Consumer Staples page.

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