Morningstar Rating

Stock Research and Analysis

by Erin Lash, CFA

Bulls Say

Kellogg's cost savings efforts appear to have some legs, and there could be opportunities to take additional capacity out of its cereal network in line with management comments.
Special K sales turned positive for the first time after five quarters of declines, reflecting efforts to reposition the brand by touting its nutritional benefits to appeal to consumers’ desire for all-around healthy products.
We think Pringles could aid in efforts to expand Kellogg's global reach and scale edge, as snack offerings are more apt to appeal to consumers around the world than cold cereal. Read more 

Bears Say

The volatile Venezuelan market accounted for 2% of Kellogg's consolidated fiscal 2014 sales and 3% of operating profits.
Lackluster innovation plagued Kellogg in the past--particularly in Europe (innovation as a percentage of net sales plunged 50% between 2006 and 2011) as it unwisely focused on too many small, locally driven ideas rather than leveraging the breadth and depth that should emanate from its scale.
Kashi sales are still trending lower, and we doubt the success of recent brand spending will become apparent until at least early fiscal 2016. Read more 

Management

Overall, Kellogg's stewardship of shareholder capital is standard. While the W.K. Kellogg Foundation Trust owns around 20% of the firm's outstanding shares, management has done a respectable job of allocating capital, as returns have exceeded our cost   Read more 

Profile

Founded in 1906, Kellogg is a leading global producer and marketer of cereal, cookies, crackers, and other convenience foods. The firm's offerings are manufactured in 20   Read more 

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