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Kellogg Company Has Declared a Quarterly Dividend

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Price movement

Kellogg Company (K) has a market capitalization of $28.8 billion. It rose by 1.1% to close at $82.71 per share on July 29, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.18%, 6.6%, and 16.0%, respectively, on the same day. K is trading 0.36% below its 20-day moving average, 5.1% above its 50-day moving average, and 12.3% above its 200-day moving average.

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Related ETF and peers

The PowerShares High Yield Equity Dividend Achievers Portfolio ETF (PEY) invests 1.7% of its holdings in Kellogg. The ETF aims to tracks a yield-weighted index of those US companies that have increased their annual dividends for at least ten consecutive years. The YTD price movement of PEY was 21.5% on July 29.

The market capitalizations of Kellogg’s competitors are as follows:

  • Mondelēz International (MDLZ) — $68.3 billion
  • ConAgra Foods (CAG) — $20.5 billion
  • Post Holdings (POST) — $5.5 billion

Kellogg declared a dividend

Kellogg Company has declared a regular dividend of $0.52 per share on its common stock. The dividend will be paid on September 15, 2016, to shareholders of record at the close of business on September 1, 2016.

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Kellogg’s rating

Deutsche Bank has increased its price target for Kellogg Company to $78 from $74 per share. It has also maintained its “hold” rating on the stock.

TheStreet Ratings rated the stock as a “buy” with a score of B+.

Performance in 1Q16

Kellogg reported 1Q16 net sales of $3.4 billion, a fall of 4.5% compared to net sales of $3.6 billion in 1Q15. Sales fell in the following segments in 1Q16:

  • US Morning Foods fell by 1.2%.
  • US Snacks fell by 2.6%.
  • North America and Other fell by 4.4%.
  • Europe fell by 1.5%.
  • Latin America fell by 34.9%.
  • Asia Pacific fell by 6.1%.

Sales from the US Specialty segment rose by 4.2% in 1Q16 compared to 1Q15. The company’s cost of goods sold as a percentage of net sales fell by 3.1%. Its operating profit rose by 14.1% in 1Q16 compared to 1Q15.

Its net income and EPS (earnings per share) fell to $1.8 billion and $0.49, respectively, in 1Q16. That compares to $2.3 billion and $0.64, respectively, in 1Q15.

Kellogg’s cash and cash equivalents rose by 23.5%, and its inventories fell by 4.2% in 1Q16 compared to 4Q15. Its current ratio and long-term debt-to-equity ratio rose to 0.62x and 3.1x, respectively, in 1Q16, compared to 0.56x and 2.5x, respectively, in 4Q15.

Projections

Kellogg made the following projections for 2016:

  • It expects currency-neutral comparable EPS of $4.00–$4.07. This projection includes the impact of currency translation of $3.64–$3.71 per share.
  • The company expects currency-neutral comparable operating profit growth of 11%–13% due to the timing of price actions in the Venezuela business.
  • It expects currency-neutral comparable net sales growth of 4%–6%. This projection excludes the 0%–2% impact of the Venezuela business.
  • The company expects its cash flow to be ~$1.1 billion.
  • It expects its capital expenditure to be 4%–5% of sales. This projection includes the impact of the cash required by Project K and an increase in capital spending of ~1% of sales to support the Pringles business.

Next, we’ll take a look at Colgate-Palmolive (CL).

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