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Crédit Agricole Upgrades Kellogg Rating to ‘Outperform’

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Jan. 11 2016, Updated 5:56 p.m. ET

Price movement of Kellogg

Kellogg (K) has a market cap of $25.3 billion. After Crédit Agricole upgraded the stock from “underperform” to “outperform,” Kellogg rose 1.6% to close at $71.48 per share as of January 8, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases are -1.1%, 0.93%, and -1.1%, respectively.

At times, the stock has broken the support of 20-day and 50-day moving averages. Currently, Kellogg is trading 0.40% below its 20-day moving average, 2.7% above its 50-day moving average, and 8.6% above its 200-day moving average.

The Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) invests 2.7% of its holdings in Kellogg. The ETF tracks an equal-weighted index of large-cap US consumer staples stocks drawn from the S&P 500. The YTD price movement of RHS is -2.4% as of January 7, 2016.

The competitors of Kellogg (K) and their market caps are as follows:

  • General Mills (GIS): $32.8 billion
  • ConAgra Foods (CAG): $17.6 billion
  • Post Holdings (POST): $3.6 billion
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Crédit Agricole upgrades Kellogg rating

Crédit Agricole has upgraded the rating for Kellogg from “underperform” to “outperform” with the increase in gross margin.

Performance of Kellogg in fiscal 3Q15

Kellogg (K) reported fiscal 3Q15 net sales of $3,329.0 million, a fall of 8.5% compared to net sales of $3,639.0 million in fiscal 3Q14. Its net income and EPS (earnings per share) fell to $205.0 million and $0.58, respectively, in fiscal 3Q15 compared to net income and EPS of $224.0 million and $0.62, respectively, in fiscal 3Q14.

Kellogg’s cash and cash equivalents rose 1.7% in fiscal 3Q15 on a quarterly basis. Its debt-to-equity ratio rose to 4.8x in fiscal 3Q15 compared to the debt-to-equity ratio of 4.6x in fiscal 2Q15.

The PE (price-to-earnings) and PBV (price-to-book value) ratios for Kellogg are 70.8x and 9.5x, respectively, as of January 8, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • currency-neutral comparable net sales growth of 1%–3%
  • operating profit growth of 4%–6%
  • currency-neutral comparable EPS of 6%–8%
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