Market reaction to earnings
On November 3, the Kellogg Company (K) reported its financial results for the third quarter, which ended October 3, 2015. The Kellogg Company trades on the NYSE (New York Stock Exchange) under the ticker “K.” The stock didn’t react well to the earnings release and fell by 4%. The company’s stock had been following a rising trend since last quarter’s earnings release and was trading in the range of $66–$69. The shares also rose following the company’s announcement of the acquisition of Egypt’s leading cereal company, Mass Food Group, on September 28. The stock closed at $68.09 on November 3. Kellogg Company’s shares have risen nearly 8% since the beginning of the year and 10% in the last 12 months.
The Kellogg Company, in conjunction with its subsidiaries, manufactures and markets ready-to-eat convenience foods and cereals. Its key products include cereals and convenience foods such as crackers, cookies, and savory snacks. The company is part of the processed and packaged goods industry and has its headquarters in Battle Creek, Michigan. Its peers in the industry include The Hershey Company (HSY), Cal-Maine Foods (CALM), and Mead Johnson Nutrition Company (MJN). Hershey reported its third quarter results on October 28, and Mead Johnson Nutrition Company reported on October 22. Cal-Maine Foods will report its third quarter earnings on December 21.
Hershey and Mead Johnson Nutrition Company also trade on the NYSE and closed at $88.06 and $84.15, respectively, on November 3. Cal-Maine Foods trades on the NASDAQ and closed at $57.32 on November 3. The Power Shares S&P 500 High Dividend Portfolio (SPHD) invests 1.6% of its portfolio in K. It closed at $33.43 on November 3. SPHD’s YTD (year-to-date) return is 1.8%.
Key highlights of 3Q15
- The Kellogg Company has seen improving trends in its US Cereal business.
- The company is increasing guidance for 2015’s operating cash flow after capital expenditure to $1.1 billion.
- The company continues to expect that it will meet previous currency-neutral guidance for net sales, operating profit, and earnings per share for full-year 2015.
- Currency-neutral comparable net sales and operating profit are expected to be in line with long-term growth targets in 2016.