Morningstar Rating

Stock Research and Analysis

by Erin Lash, CFA

Bulls Say

Kellogg's joint venture with Wilmar International--a Singaporean agribusiness firm with around $45 billion in annual sales--strikes us as smart, given its deep understanding of the local consumer.
Management seems to understand products that resonate with consumers are crucial in the competitive environment in which it plays, targeting the percent of sales derived from products launched over the prior three-year period to amount to around 15% (up from 12% in fiscal 2009).
Kellogg's commitment to return cash to shareholders is evident in that it has paid a quarterly dividend since 1925. Read more 

Bears Say

A tough economic climate in Europe and fierce competition at home are unlikely to abate; Kellogg is still battling trade inventory reductions in cereal and snacks.
A lack of innovative offerings plagued Kellogg in the past--particularly in Europe (innovation as a percent of net sales plunged 50% between 2006 and 2011) where it unwisely focused on too many small, locally driven ideas rather than leveraging the breadth and depth of its scale.
With more than 30% of its sales and profits derived from its international operations, Kellogg's results may be hurt by unfavorable exchange rates. 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 18   Read more 

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