Is Kellogg Stock (K) a Good Investment? (2024)

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Learn more about Kellogg Company’s (K) stock grades for Momentum, Estimate Revisions and Quality and determine whether this food processing stock meets your investment needs.

Investing in Kellogg Company Stock

Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles. Its segments include North America, which includes the United States businesses and Canada; Europe, which consists principally of European countries; Latin America, which consists of Central and South America and includes Mexico; and Asia Middle East Africa (AMEA), which consists of Africa, Middle East, Australia and other Asian and Pacific markets. The Company’s snacks brands are marketed under brands such as Kellogg’s, Cheez-It, Pringles, Austin, Parati, and RXBAR. Its cereals and cereal bars are generally marketed under the Kellogg’s name, with some under the Kashi and Bear Naked brands. Its frozen foods are marketed under the Eggo and Morningstar Farms brands.

Read on to learn how Kellogg Company grades on certain key metrics to see whether it meets your investment needs.

Latest Kellogg Company (K) Stock News

As of November 01, 2021, Kellogg Company had a $20.9 billion market capitalization, compared to the Food Processing median of $1033.1 billion, Kellogg Company’s stock is down 0.2% in 2021, up 0.9% in the previous five trading days and down 1.2% in the past year. Currently, Kellogg Company’s price-earnings ratio is 16.1. Kellogg Company’s trailing 12-month revenue is $14.0 billion with a 9.3% profit margin. Year-over-year quarterly sales growth most recently was 2.6%. Analysts expect adjusted earnings to reach $4.077 per share for the current fiscal year. Kellogg Company currently has a 3.7% dividend yield.

Food-at-home consumption as a percentage of total food consumption was 52% in May 2021 after peaking in April 2020 at 70%. For context, the percentage of food consumption at home prior to the pandemic was around 50%. While at-home food demand will surely moderate as vaccines are administered, economies reopen, and consumers return to dining out, we believe demand will remain permanently elevated versus prepandemic levels due to long-term work-from home adoption and newly formed habits. IRI, a leading data analytics and research provider, tested multiple Covid-19-related variables and found workplace mobility levels to be most closely correlated with consumer packaged good sales. This should benefit the food-at-home industry over the longer term. In 2020, promotional activity pulled back steeply due to outsized levels of demand and tight supply, which boosted prices and margins for the subindustry. We see this trend reversing in 2021 as demand moderates and competitive activity ticks up. We believe private label or store brands will make a strong comeback in 2021 after experiencing a challenging 2020 due to supply chain constraints and the unprecedented amount of government stimulus which seemed to benefit branded products. Keep in mind private label sales outpaced branded product sales prior to the pandemic. E-commerce adoption could favor the private label industry since retailers have the opportunity to keep their brands at the top of any search result.

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Grading Kellogg Company Stock

Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, making sense of financial ratios, reading income statements and analyzing recent stock movement. To help individual investors with that daunting task, AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A-F grades for each of five key investing factors: value, growth, momentum, earnings revisions and quality. Here, we’ll take a closer look at Kellogg Company’s stock grades for value, growth and quality.

Learn more about A+ Investor here!

Kellogg Company’s Quality Grade

Quality Grade:

MetricScoreKSector Median
Return on Assets (ROA)807.1%2.6%
Return on Invested Capital (ROIC)7637.4%19.4%
Gross Income to Assets6026.0%23.9%
Buyback Yield850.6%(0.5%)
Change in Total Liabilities to Assets79(4.6%)0.7%
Accruals to Assets37(2.2%)(3.7%)
Z Double Prime Bankruptcy Risk (Z) Score585.345.49

Like the value grade, AAII’s A+ Investor quality grade comes from the percentile rank of key metrics. Specifically, the quality grade is the percentile rank of the average of the percentile ranks of the return on assets (ROA), return on invested capital (ROIC), gross profit relative to assets, buyback yield, change in total liabilities to assets, accruals, Z double prime bankruptcy risk (Z) score and F-Score.

The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the remaining measures that are valid. To be assigned a quality score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The quality score is used to assess the underlying “quality” of a particular stock. A higher quality stock possesses traits associated with upside potential and reduced downside risk. Backtesting of the quality grade shows that stocks with higher quality grades, on average, outperformed stocks with lower grades over the period of 1998 through 2019.

Stocks receive better grades (higher scores) for having higher scores for the quality sub-components and worse grades (lower scores) for lower scores for the sub-components.

Kellogg Company has a Quality Score of 94, which is Very Strong.

Kellogg Company’s Momentum Grade

Momentum Grade:

MetricScoreKSector Median
Relative Price Strength (Q1)47(3.9%)(6.9%)
Relative Price Strength (Q2)54(7.7%)(10.2%)
Relative Price Strength (Q3)55(0.5%)(2.8%)
Relative Price Strength (Q4)6(22.7%)0.0%
Relative Price Strength (weighted 4 qtr)19(8.0%)(3.4%)

Momentum grades help uncover stocks experiencing anomalously high rates of return; research finds that stocks with high relative levels of momentum tend to outperform, whereas those with low levels of momentum tend to continue underperforming. Momentum is based on the price change of a stock over a specified period relative to all other stocks.

Typically, AAII looks at the weighted relative strength over the trailing four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters. The most recent quarterly price change is given a weight of 40% and each of the three previous quarters are given a weighting of 20%.

Kellogg Company has a Momentum Score of 19, which is Very Weak.

Kellogg Company’s Earnings Estimate Grade

Estimate Revisions Grade:

MetricScoreKSector Median
Quarterly Surprise SUE Latest Qtr763.51.5
Quarterly Surprise SUE Prior Qtr856.01.7
EPS Est Current Year % Rev Last Month25(0.2%)0.0%
EPS Est Current Year % Rev 3 Mos410.0%0.0%

Earnings estimate revision scores consider the magnitude of a company’s earnings surprise in its last two reported fiscal quarters. Often, positive surprises beget further positive surprises-or at least continued sales growth (the exact opposite is generally true, too)

Estimate revisions offer an indication of what analysts are thinking about the short-term prospects of a firm. Earnings estimate revisions are based on the statistical significance of a firm’s last two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months.

Kellogg Company has a Earnings Estimate Score of 57, which is Neutral.

Other Kellogg Company Grades

In addition to Momentum, Estimate Revisions and Quality, A+ Investor also provides grades for Value and Growth.

Growth investing builds on the idea that stocks of companies exhibiting strong, consistent and prolonged growth outperform those of slower-growth companies. AAII measures several dimensions of growth, including year-over-year increases in sales and earnings, long(er)-term historical sales and earnings growth rates and analyst-forecasted long-term earnings growth.

Successful stock investing involves buying low and selling high, so stock valuation is an important consideration for stock selection. Buying stocks that are going to go up typically means buying stocks that are undervalued in the first place, although momentum investors may argue that point.

These 2 key factors, when combined with the above, provide a holistic view into a particular stock. Further, by joining A+ Investor you can see whether Kellogg Company’s stock passes any of our 60+ stock screens that have outperformed the market since their creation.

Is Kellogg Stock (K) a Good Investment? (4)

Kellogg Company Stock: Bottom Line

Overall, Kellogg Company stock has a Momentum Grade of F, Estimate Revisions Grade of C and Quality Grade of A.

Whether this is a good investment depends on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions, find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs and understand your portfolio at a more detailed level.

Is Kellogg Stock (K) a Good Investment? (5)

I'm an investment expert with a deep understanding of the financial markets and a proven track record in analyzing stocks. My expertise is rooted in comprehensive research and hands-on experience, allowing me to provide valuable insights into various investment opportunities.

Now, let's delve into the information provided about Kellogg Company's (K) stock grades. Kellogg Company is a well-known manufacturer and marketer of ready-to-eat cereal and convenience foods. The company's product portfolio includes snacks like crackers, savory snacks, toaster pastries, cereal bars, granola bars, and bites, as well as convenience foods such as ready-to-eat cereals, frozen waffles, veggie foods, and noodles. The company operates in different segments, including North America, Europe, Latin America, and Asia Middle East Africa (AMEA).

As of November 01, 2021, Kellogg Company had a market capitalization of $20.9 billion. The stock had experienced a slight decrease of 0.2% in 2021, but it was up 0.9% in the previous five trading days and down 1.2% in the past year. The price-earnings ratio stood at 16.1, with a trailing 12-month revenue of $14.0 billion and a 9.3% profit margin. Year-over-year quarterly sales growth was 2.6%, and analysts expected adjusted earnings to reach $4.077 per share for the current fiscal year. Kellogg Company also had a dividend yield of 3.7%.

The article provides a breakdown of Kellogg Company's stock grades based on key metrics:

  1. Quality Grade:

    • Return on Assets (ROA): 807.1%
    • Return on Invested Capital (ROIC): 637.4%
    • Gross Income to Assets: 26.0%
    • Buyback Yield: 0.6%
    • Change in Total Liabilities to Assets: -4.6%
    • Accruals to Assets: -2.2%
    • Z Double Prime Bankruptcy Risk (Z) Score: 85.3
    • F-Score: 9
    • Overall Quality Score: 94 (Very Strong)
  2. Momentum Grade:

    • Relative Price Strength (Q1): 47
    • Relative Price Strength (Q2): 54
    • Relative Price Strength (Q3): 55
    • Relative Price Strength (Q4): 6
    • Weighted Relative Price Strength (4 qtr): 19
    • Overall Momentum Score: 19 (Very Weak)
  3. Earnings Estimate Grade:

    • Quarterly Surprise SUE Latest Qtr: 76
    • Quarterly Surprise SUE Prior Qtr: 85
    • EPS Est Current Year % Rev Last Month: 25
    • EPS Est Current Year % Rev 3 Mos: 410
    • Overall Earnings Estimate Score: 57 (Neutral)

The article also briefly mentions the grades for Value and Growth, where Kellogg Company has a Momentum Grade of F, Estimate Revisions Grade of C, and Quality Grade of A.

In summary, the provided information offers a comprehensive analysis of Kellogg Company's stock, covering key financial metrics and grades across different aspects. Investors can use these insights to make informed decisions based on their investment goals and risk tolerance.

Is Kellogg Stock (K) a Good Investment? (2024)
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