NYSE:K

Stock Analysis Report

Executive Summary

Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods.

Rewards

Trading at 30% below its fair value

Earnings are forecast to grow 19.69% per year

Pays a reliable dividend of 3.26%

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 3.26% is not well covered by earnings

Profit margins (5.3%) are lower than last year (13.7%)



Snowflake Analysis

Average dividend payer and slightly overvalued.


Similar Companies

Share Price & News

How has Kellogg's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: K has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.3%

K

-1.5%

US Food

-2.7%

US Market


1 Year Return

18.5%

K

13.0%

US Food

21.2%

US Market

Return vs Industry: K exceeded the US Food industry which returned 13.9% over the past year.

Return vs Market: K underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

KIndustryMarket
7 Day-2.3%-1.5%-2.7%
30 Day-0.3%-1.6%0.09%
90 Day8.0%5.4%6.9%
1 Year23.1%18.5%16.1%13.0%23.8%21.2%
3 Year5.1%-5.1%0.1%-7.9%48.1%38.6%
5 Year21.3%3.5%42.8%26.0%72.5%53.4%

Price Volatility Vs. Market

How volatile is Kellogg's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kellogg undervalued compared to its fair value and its price relative to the market?

30.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: K ($70) is trading below our estimate of fair value ($100)

Significantly Below Fair Value: K is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: K is poor value based on its PE Ratio (32.9x) compared to the Food industry average (25.4x).

PE vs Market: K is poor value based on its PE Ratio (32.9x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: K is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: K is overvalued based on its PB Ratio (8.8x) compared to the US Food industry average (2.1x).


Next Steps

Future Growth

How is Kellogg forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

14.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: K's forecast earnings growth (19.7% per year) is above the savings rate (1.7%).

Earnings vs Market: K's earnings (14.2% per year) are forecast to grow slower than the US market (14.7% per year).

High Growth Earnings: K's earnings are forecast to grow, but not significantly.

Revenue vs Market: K's revenue (1% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: K's revenue (1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: K's Return on Equity is forecast to be very high in 3 years time (46.9%).


Next Steps

Past Performance

How has Kellogg performed over the past 5 years?

13.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: K has high quality earnings.

Growing Profit Margin: K's current net profit margins (5.3%) are lower than last year (13.7%).


Past Earnings Growth Analysis

Earnings Trend: K's earnings have grown by 13.7% per year over the past 5 years.

Accelerating Growth: K's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: K had negative earnings growth (-60.2%) over the past year, making it difficult to compare to the Food industry average (-12.1%).


Return on Equity

High ROE: Whilst K's Return on Equity (22.6%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kellogg's financial position?


Financial Position Analysis

Short Term Liabilities: K's short term assets ($3.5B) do not cover its short term liabilities ($4.4B).

Long Term Liabilities: K's short term assets ($3.5B) do not cover its long term liabilities ($9.8B).


Debt to Equity History and Analysis

Debt Level: K's debt to equity ratio (240.3%) is considered high.

Reducing Debt: K's debt to equity ratio has increased from 224.4% to 240.3% over the past 5 years.

Debt Coverage: K's debt is not well covered by operating cash flow (19.4%).

Interest Coverage: K's interest payments on its debt are well covered by EBIT (5.6x coverage).


Balance Sheet

Inventory Level: K has a high level of physical assets or inventory.

Debt Coverage by Assets: K's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

What is Kellogg's current dividend yield, its reliability and sustainability?

3.31%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%1.4%markettop25%3.7%industryaverage2.7%forecastin3Years3.5%

Current dividend yield vs market & industry

Notable Dividend: K's dividend (3.26%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: K's dividend (3.26%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: K's dividends per share have been stable in the past 10 years.

Growing Dividend: K's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (105.7%), K's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: K's dividends in 3 years are forecast to be covered by earnings (59% payout ratio).


Next Steps

Management

What is the CEO of Kellogg's salary, the management and board of directors tenure and is there insider trading?

3.6yrs

Average management tenure


CEO

Steve Cahillane (54yo)

2.3yrs

Tenure

US$9,989,992

Compensation

Mr. Steven A. Cahillane, also known as Steve, has been the Chief Executive Officer, President and Director of Kellogg Company since October 2, 2017 and has been its Chairman since March 16, 2018. Mr. Cahil ...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD9.99M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Insufficient data to compare Steve's compensation with company performance.


Management Age and Tenure

3.6yrs

Average Tenure

54yo

Average Age

Experienced Management: K's management team is considered experienced (3.6 years average tenure).


Board Age and Tenure

5.1yrs

Average Tenure

58yo

Average Age

Experienced Board: K's board of directors are considered experienced (5.1 years average tenure).


Insider Trading

Insider Buying: K insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$136,06306 Nov 19
Maria Mejia
EntityIndividual
Shares2,136
Max PriceUS$63.70
SellUS$159,70001 Nov 19
Alistair Hirst
EntityIndividual
Role
Senior Key Executive
Senior Vice President of Global Supply Chain
Shares2,500
Max PriceUS$63.88
SellUS$1,316,35601 Nov 19
Gary Pilnick
EntityIndividual
Role
Chief Legal Officer
Vice Chairman of Corporate Development & Chief Legal Officer
Shares20,655
Max PriceUS$63.73

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • John Renwick

    Vice President of Investor Relations & Corporate Planning

    • Tenure: 3.7yrs
  • Gary Pilnick (55yo)

    Vice Chairman of Corporate Development & Chief Legal Officer

    • Tenure: 4yrs
    • Compensation: US$3.47m
  • Steve Cahillane (54yo)

    Chairman

    • Tenure: 2.3yrs
    • Compensation: US$9.99m
  • Amit Banati (50yo)

    Senior VP & CFO

    • Tenure: 0.5yrs
  • Alistair Hirst (60yo)

    Senior Vice President of Global Supply Chain

    • Tenure: 7.8yrs
    • Compensation: US$2.87m
  • Melissa Howell (52yo)

    Senior Vice President of Global Human Services

    • Tenure: 3.6yrs
  • Chris Hood (56yo)

    Senior VP & President of Kellogg North America

    • Tenure: 6.3yrs
    • Compensation: US$3.95m
  • Michael Hunter

    Vice President of Global Sales

    • Tenure: 4.7yrs
  • Kurt Forche (49yo)

    VP, Corporate Controller & Principal Accounting Officer

    • Tenure: 1.4yrs
  • Lesley Salmon

    Senior VP & Chief Information Officer

    • Tenure: 0.9yrs

Board Members

  • Don Knauss (68yo)

    Lead Independent Director

    • Compensation: US$305.00k
  • Rick Dreiling (66yo)

    Independent Director

    • Tenure: 3.6yrs
    • Compensation: US$260.00k
  • Jim Jenness (73yo)

    Non-Executive Director

    • Tenure: 19.5yrs
    • Compensation: US$260.00k
  • Zack Gund (48yo)

    Independent Director

    • Tenure: 5.1yrs
    • Compensation: US$275.00k
  • Stephanie Burns (64yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$280.00k
  • Steve Cahillane (54yo)

    Chairman

    • Tenure: 2.3yrs
    • Compensation: US$9.99m
  • Carter Cast (55yo)

    Independent Director

    • Tenure: 2.6yrs
    • Compensation: US$372.03k
  • Mary Laschinger (58yo)

    Independent Director

    • Tenure: 7.3yrs
    • Compensation: US$280.00k
  • Carolyn Tastad (58yo)

    Independent Director

    • Tenure: 4.1yrs
    • Compensation: US$260.00k
  • La Montgomery Tabron (56yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$260.00k

Company Information

Kellogg Company's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Kellogg Company
  • Ticker: K
  • Exchange: NYSE
  • Founded: 1906
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: US$23.529b
  • Shares outstanding: 341.09m
  • Website: https://www.kelloggcompany.com

Number of Employees


Location

  • Kellogg Company
  • One Kellogg Square
  • Battle Creek
  • Michigan
  • 49016
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
KELXTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
KELDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
KSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1968
0R1RLSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
KELLWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
K *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968

Biography

Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods. The company operates through U.S. Snacks, U.S. Morning Foods, U.S. Specialty Channels, North America Other, Europe, Latin America, and Asia Pacific segments. Its principal products include crackers, cookies, crisps and other savory snacks, toaster pastries, cereal bars, granola bars and bites, fruit-flavored snacks, ready-to-eat cereals, frozen waffles, veggie foods, and noodles. The company offers its snacks and other convenience foods under the Kellogg’s, Keebler, Cheez-It, Pringles, Murray, Austin, Famous Amos, Parati, and RXBAR brand names; cereals and cereal bars under the Kellogg’s, Kashi, and Bear Naked brands; and frozen foods under the Eggo and Morningstar Farms brand names. It sells its products to retailers through direct sales forces, as well as brokers and distributors in approximately 180 countries. Kellogg Company was founded in 1906 and is headquartered in Battle Creek, Michigan. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/28 23:42
End of Day Share Price2020/01/28 00:00
Earnings2019/09/28
Annual Earnings2018/12/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.