What Do Analysts Think About Kellogg Company's (NYSE:K) Future?

The latest earnings release Kellogg Company's (NYSE:K) announced in December 2017 showed that the company gained from a sizeable tailwind, eventuating to a high double-digit earnings growth of 82.85%. Investors may find it useful to understand how market analysts perceive Kellogg's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. View our latest analysis for Kellogg

Analysts' outlook for next year seems buoyant, with earnings increasing by a robust 12.90%. This growth seems to continue into the following year with rates reaching double digit 18.90% compared to today’s earnings, and finally hitting US$1.59B by 2021.

While it’s informative knowing the growth year by year relative to today’s value, it may be more valuable determining the rate at which the business is growing on average every year. The pro of this technique is that we can get a bigger picture of the direction of Kellogg's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.42%. This means that, we can assume Kellogg will grow its earnings by 6.42% every year for the next couple of years.

Next Steps:

For Kellogg, I've put together three essential factors you should further examine:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is K worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether K is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of K? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.