Chicago, Illinois-based Kellanova (K) manufactures and markets snacks and convenience foods. Valued at a market cap of $28.6 billion, the company’s principal products consist of snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars, and bites; and convenience foods, including ready-to-eat cereals, frozen waffles, veggie foods, and noodles. It sells its products under various well-known brands, including Kellogg's, Cheez-It, Pringles, Austin, Parati, RXBAR, and Eggo, to name a few.
Shares of this snacks and convenience food manufacturing company have considerably outpaced the broader market over the past 52 weeks. K has rallied 33.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 8.6%. Moreover, on a YTD basis, the stock is up 2%, compared to SPX’s 4.3% drop.
Zooming in further, Kellanova has also outpaced the First Trust Nasdaq Food & Beverage ETF’s (FTXG) 8.6% decline over the past 52 weeks and 1.7% loss on a YTD basis.
On May 1, Kellanova’s shares closed up marginally after its Q1 earnings release. The company posted revenue of $3.1 billion, which declined 3.7% from the year-ago quarter, primarily due to unfavourable currency translation and widespread category softness. However, strong performance in its emerging markets helped drive a slight increase in its organic revenues.
On the earnings front, its adjusted EPS declined 10.9% year-over-year to $0.90, while its adjusted operating profit dropped 13.2% from the prior-year period. The decline in net sales and adjusted operating profit across most of its reportable segments, driven by ongoing macroeconomic and industry-related challenges, weighed on the company's overall performance.
For the current fiscal year, ending in December, analysts expect K’s EPS to decline 1.3% year over year to $3.81. The company’s earnings surprise history is mixed. It exceeded the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 16 analysts covering the stock, the consensus rating is a “Hold” which is based on all 16 “Hold” ratings.
This configuration is slightly less bullish than two months ago, with one analyst suggesting a “Moderate Buy” rating.
On May 5, Matthew Smith, CFA from Stifel Financial Corp. (SF) maintained a “Hold” rating on Kellanova, with a price target of $83.50, the Street-high price target, which indicates a 1.1% potential upside from the current levels.
As of writing, the company is trading above its mean price target of $81.47.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
