Morningstar Rating

Stock Research and Analysis

by Erin Lash, CFA

Bulls Say

Kellogg is taking a stringent eye toward its cost structure (with plans to reduce developed market plant capacity), and recently suggested that there could be opportunities to take additional capacity out of its cereal network.
Management seems to recognize that brand investments (behind both new products and marketing support) are what's needed to reignite top-line performance, given the highly competitive environment in which Kellogg plays.
Kellogg's commitment to return cash to shareholders is evident in that it has paid a quarterly dividend since 1925. Read more 

Bears Say

Some of Kellogg's new products have fallen flat with consumers, namely within the cereal aisle, such as Mini-Wheats Crunch, Crunchy Nut, and FiberPlus.
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.
Consumers are shying away from diet-focused products toward those they perceive to have an all-around healthy profile, which has challenged sales of Special K. 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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