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

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.

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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.

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Quality Grade:

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.

Momentum Grade:

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.

Estimate Revisions Grade:

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.

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.

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.

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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.