Q3 Preview: Kellogg (K) Looks to Meet its Recently Lowered Expectations; Analysts See Innovation Coming
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Price: $83.44 --0%
Rating Summary:
6 Buy, 25 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
6 Buy, 25 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Shares of Kellogg Co. (NYSE: K) are up 29 cents to $50.55 in midday market movement on Monday ahead of the company's third-quarter earnings release scheduled for Tuesday before the opening bell.
The company known for its variety of cereal is expected by analysts to report earnings of 90 cents per share on revenue of $3.16 billion.
In the second quarter, Kellogg reported earnings of 79 cents per share, missing the analyst estimate of 89 cents per share. The company reported second-quarter revenue of $3.06 billion, missing the consensus of $3.29 billion.
Since the start of the third quarter, shares of Kellogg are up $0.50 or 1 percent. Year-to-date the stock is $2.65 or 4.98 percent.
A valuation shows that Kellogg is going for a forward P/E of 15.44x full year 2010 estimates.
Data from Bloomberg shows that 12 analysts have a Buy rating on the stock, 10 have a Hold and 1 has a Sell. The average analyst price target on Kellogg is $55 with a target range of $49 to $66.
On October 21, the company said that its sees Q3 sales down 4 percent and EPS in the period to be down 4 percent.
Kellogg also cut its full year 2010 outlook, seeing sales down 1 percent and currency neutral EPS up 4 percent to 5 percent down from a prior view of up 8 percent to 10 percent.
Analyst comments
JPMorgan maintains an Overweight rating on Kellogg with a price target of $59.
JPMorgan analyst says, "A key issue with Kellogg is its relative lack of cereal innovation this year. According to our sources in the grocery community, Kellogg has already communicated what appears to be a strong cereal innovation slate that begins in December and ramps dramatically in January. Among the entries is a new brand called Crunchy Nut, which has already ascended into the top ten cereal brands in the United Kingdom and Australia, we are told."
Goldman Sachs maintains a Neutral rating on Kellogg with a price target of $51.
Goldman Sachs analyst says, "K shares have barely reacted to the negative preannouncement in part due to low expectations around 3Q and a view that FY11 is setting up to be an even stronger recovery year than previously anticipated. We believe this view is overly optimistic and remain on the sidelines on the stock."
On October 21, Deutsche Bank reiterated a Buy rating on Kellogg with a $57 price target.
Deutsche Bank analyst says, "With the company continuing to struggle in a number of areas, it is possible reinvestment to rejuvenate sales will be greater than we had previously assumed. However, a competitor's recent price increase in cold cereal along with new products should offset the cost of additional advertising and reinvestment."
The company known for its variety of cereal is expected by analysts to report earnings of 90 cents per share on revenue of $3.16 billion.
In the second quarter, Kellogg reported earnings of 79 cents per share, missing the analyst estimate of 89 cents per share. The company reported second-quarter revenue of $3.06 billion, missing the consensus of $3.29 billion.
Since the start of the third quarter, shares of Kellogg are up $0.50 or 1 percent. Year-to-date the stock is $2.65 or 4.98 percent.
A valuation shows that Kellogg is going for a forward P/E of 15.44x full year 2010 estimates.
Data from Bloomberg shows that 12 analysts have a Buy rating on the stock, 10 have a Hold and 1 has a Sell. The average analyst price target on Kellogg is $55 with a target range of $49 to $66.
On October 21, the company said that its sees Q3 sales down 4 percent and EPS in the period to be down 4 percent.
Kellogg also cut its full year 2010 outlook, seeing sales down 1 percent and currency neutral EPS up 4 percent to 5 percent down from a prior view of up 8 percent to 10 percent.
Analyst comments
JPMorgan maintains an Overweight rating on Kellogg with a price target of $59.
JPMorgan analyst says, "A key issue with Kellogg is its relative lack of cereal innovation this year. According to our sources in the grocery community, Kellogg has already communicated what appears to be a strong cereal innovation slate that begins in December and ramps dramatically in January. Among the entries is a new brand called Crunchy Nut, which has already ascended into the top ten cereal brands in the United Kingdom and Australia, we are told."
Goldman Sachs maintains a Neutral rating on Kellogg with a price target of $51.
Goldman Sachs analyst says, "K shares have barely reacted to the negative preannouncement in part due to low expectations around 3Q and a view that FY11 is setting up to be an even stronger recovery year than previously anticipated. We believe this view is overly optimistic and remain on the sidelines on the stock."
On October 21, Deutsche Bank reiterated a Buy rating on Kellogg with a $57 price target.
Deutsche Bank analyst says, "With the company continuing to struggle in a number of areas, it is possible reinvestment to rejuvenate sales will be greater than we had previously assumed. However, a competitor's recent price increase in cold cereal along with new products should offset the cost of additional advertising and reinvestment."
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