Kellogg: What Can Investors Expect in Q1?



Kellogg’s underlying business to disappoint

Kellogg (K) is scheduled to announce its first-quarter results on May 2. Softness in Kellogg’s organic sales, cost headwinds, and an unfavorable mix could continue to take a toll on its financials in the first quarter.

Analysts expect Kellogg’s top line to continue to improve on a YoY (year-over-year) basis due to the consolidation of Multipro’s operations. However, negative currency rates and weak organic sales could limit the top-line growth rate.

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Analysts expect Kellogg’s bottom line to mark a double-digit decline, which reflects currency volatility, a margin contraction, and a negative product and market mix. Kellogg’s profit margins are expected to decline, which reflects input and logistics cost headwinds, lower volumes and pricing, and the consolidation of Multipro’s operations.

Kellogg stock underperformed its peers

Kellogg stock has risen 2.5% on a YTD (year-to-date) basis as of April 23. The stock has underperformed the broader markets and most of its peers. Conagra Brands (CAG), General Mills (GIS), J.M. Smucker (SJM), Mondelēz (MDLZ), and Hershey (HSY) shares have risen 44.6%, 31.0%, 30.2%, 25.8%, and 9.0%, respectively, on a YTD basis.

The incremental sales from acquired brands and improved margins drove these packaged food companies’ stocks. In comparison, the S&P 500 has risen by 17.0% in 2019.


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