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VIDEOFive Reasons Kellogg's Earnings Look Tasty
Company's exceeded expectations in 3 of 4 quarters.
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Yeah, I know -- it’s not quite as sexy a story as the aforementioned companies. But I think the company deserves a solid glance nonetheless. Here’s what I like about Tony the Tiger & Co.:
1. From a big-picture standpoint, the company offers a host of other munchies beyond its “grrreat” cereals that folks are going to be buying a lot more of, given the fact that the macro picture is looking better.
2. I like its international bent. I know when people picture Kellogg, they see an American kid woofing down a bowl of cereal at a kitchen table. But just to give you a flavor of what the company really is, in the first quarter, a little more than 30% of its sales and about 31.9% of its operating profit came from outside the good ol' US of A. I dig the diversity, and there’s a lot of room to grow sales abroad.
3. You have to like the scoreboard: It's coming off a much-better-than-expected quarter where it blew out the Street estimate by a sweet nickel. And in the last 3 of 4 quarters it's exceeded Street expectations. It's certainly showing shareholders the money lately. As far as the quarter that's to be announced -- I believe it will at least meet or beat. The economy is doing better, and management knows this game. I'm sure it wants to keep the ball rolling and will be doing its darndest to make sure it puts up a good number.
4. It's expected to grow a bit more than 9% per annum (9.25% actually) in the next 5 years, and for a company of its size (the estimate is a little more than $12.6 billion in revenue this year), that’s not too shabby.
5. The announcement earlier in the year about a planned dividend bump-up sure looked sweet. As it is right now, the forward yield is a little over 2.8%. That’s what I call a little bonus action.
In case you were wondering, I’m also sweet on a couple of other food stocks, including Kraft (KFT), which I wrote about last month. The insider-buying in May gets my motor running, as does the dividend and the respectable multiple of expected earnings it trades at.Conagra (CAG) is easy on the eyes, too. If it’s able to get a little wind at its back and crank through the high, it would get a lot of ink and attention.
Hey -- have a great day!
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