K - Embedded Expectations Analysis - 2021 03 29
Kellogg Company (K:USA) is currently trading below recent averages relative to UAFRS-based (Uniform) earnings, with a 19.6x Uniform P/E. Even at these levels, the market is pricing in expectations for profitability to remain stable, but management may be concerned about sustaining market share gains, at-home consumption demand, and revenue growthSpecifically, management may lack confidence in their ability to sustain improvements in cash flow generation, maintain market share gains across their product categories, and cultivate noodle category revenue growth in Africa and the Middle East. Moreover, they may have concerns about emerging market uncertainty and the sustainability of increased sales velocity. Furthermore, management may lack confidence in their ability to deliver balanced growth over time, adapt to the online food shopping trend, and fix cereal business capacity constraints. Additionally, they may have concerns about the deceleration of at-home consumption and their big brand investments, and they may lack confidence in their ability to sustain Eggo's outperformance in its category
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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