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Kellanova (K) Stock Up on Former Kellogg's Q4 Earnings Beat

Kellanova K delivered fourth-quarter 2023 results for the company that formerly operated as Kellogg Company. The company’s top and bottom line increased year over year and surpassed the Zacks Consensus Estimate in the quarter. Results gained from a focus on revenue growth management and sustained momentum across emerging markets. K’s shares were up more than 1.5% in the pre-market trading session on Feb 8.

Quarter in Detail

Kellanova reported adjusted earnings of 78 cents per share, increasing 21.9% year over year. On a currency-neutral basis, adjusted earnings per share (EPS) rose 18.8% to 76 cents. The bottom line surpassed the Zacks Consensus Estimate of 74 cents.

The company recorded net sales of $3,174 million, surpassing the Zacks Consensus Estimate of $3,091.4 million. The top line inched up 0.3% year over year. The favorable price/mix across all four regions is more than offset by the impact of volume elasticity, unfavorable currency movements and the divestiture of the company’s Russia business. Organic net sales (excluding currency and divestiture impacts) increased 7%.

Kellanova’s adjusted operating profit increased 29.2% to $392 million while increasing 30.1% to $395 million on a currency-neutral basis.

Kellanova Price, Consensus and EPS Surprise


Kellanova Price, Consensus and EPS Surprise
Kellanova Price, Consensus and EPS Surprise

Kellanova price-consensus-eps-surprise-chart | Kellanova Quote


Segment Discussion

Sales in the North America segment amounted to $1,588 million, down 0.8% year over year. The downside was caused by pressured volumes stemming from increased elasticity. This was somewhat offset by a favorable price/mix. Net sales declined 0.8% on an organic basis.

Revenues from the Europe segment totaled $613 million, up 9.3% year over year on the favorable price/mix, momentum in the snacks category and favorable currency rates. However, divestiture of the Russian business and the impacts of price elasticity were a concern. Organic net sales increased 10.3%.

Revenues in Latin America totaled $328 million, up 13.9% year over year, backed by a solid price/mix and favorable foreign currency rates. Organic sales ascended 5.3%.

Revenues in the Asia Pacific and the Middle East & Africa segment totaled $645 million, down 9.9% year over year. Unfavorable foreign currency rates caused the downside. However, the favorable price/mix and volume were a breather. Organic sales increased 22%.

Other Financials

The company ended the reported quarter with cash and cash equivalents of $274 million, long-term debt of $5,089 million and total equity of $3,369 million. Kellanova generated net cash from operating activities of $1,645 million for the year ended Dec 30, 2023. Free cash flow was $968 million in the first nine months of 2023.

Zacks Investment Research
Zacks Investment Research

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2024 Guidance

Kellanova expects organic net sales growth of nearly 3% or more, driven by snacks brands and emerging markets. The guidance remains within its long-term target range. For 2024, the adjusted operating profit is expected to be $1,850-1,900 million. Finally, K envisions adjusted EPS to come in the band of $3.55-$3.65.

The Zacks Rank #3 (Hold) stock has increased 3.9% in the past three months compared with the industry’s growth of 5.7%.

3 Appetizing Food Bets

Ingredion Incorporated INGR, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2 (Buy). INGR delivered a positive earnings surprise of 6.5% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 3.5%, respectively, from the year-ago reported numbers.

Mondelez International MDLZ has a trailing four-quarter earnings surprise of 8.6%, on average. MDLZ currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 2.9% and 10%, respectively, from the year-ago period's reported figures.

Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.

The Zacks Consensus Estimate for Vital Farms’ current financial year sales suggests growth of 29% from the year-ago reported figure.


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