K - Embedded Expectations Analysis - 2019 01 09
Kellogg Company (K:USA) is currently trading near recent lows relative to UAFRS-based (Uniform) Earnings, with a 20.0x Uniform P/E. However, even at these levels, the market has bullish expectations for the firm, while management appears concerned about emerging market operations, declining operating profit, and the sustainability of broad-based growthSpecifically, management may be concerned about the sustainability of increased cereal consumption in emerging markets and their ability to improve emerging market margins, and may lack confidence in the investments made in recent quarters. Moreover, they may lack confidence in their ability to drive expected broad-based sales growth, and may be downplaying concerns about declining operating profit dollars. Additionally, they may have concerns about continued cost pressures, and may lack confidence in their ability to improve supply chain operations
Kellogg is engaged in the manufacture and marketing of ready-to-eat cereal and convenience foods. The company's principal products are snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles. The company's snacks brands are marketed under brands such as Kellogg's, Cheez-It, Pringles, Austin, Parati, and RXBAR. The company's cereals and cereal bars are generally marketed under the Kellogg's name, with some under the Kashi and Bear Naked brands. The company's frozen foods are marketed under the Eggo and Morningstar Farms brands.
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