Morningstar Rating

Stock Research and Analysis

by Erin Lash, CFA

Bulls Say

Kellogg's cost savings efforts appear to have some legs, as the firm recently suggested that there could be opportunities to take additional capacity out of its cereal network.
Kellogg has looked to acquire local firms or has taken part in joint ventures with native companies that understand the domestic market in order to help minimize the risk inherent in international expansion, which we view favorably.
We think the Pringles brand could aid in expanding 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 sales in fiscal 2014 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 of its scale.
Consumers are shying away from diet-focused products toward those they perceive to have an all-around healthy profile, which has constrained sales of Special K cereal and snacks. 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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