Break Your Bowl Of Kellogg’s

The Kellogg Company (K) has recently experienced falling demand for its cereal and snack products in the US, which is a significant hurdle as these products constitute a major portion of the company’s revenues. While international expansion is still a key driver for Kellogg’s growth, core product categories (cereal and snacks) have been suffering and the lack of funds could hit the company’s international expansion plans. Bidness Etc thinks Kellogg’s stock is a sell.

Introduction

Kellogg operates globally and in the US packaged foods and meat industry. Following its acquisition of Pringles for $2.7 billion in May 2012, Kellogg became the world’s second largest savory snack company after General Mills (GIS). The company specializes in the production of cereal and convenience foods and owns famous brands like Pop-Tarts, Frosted Flakes and Special K.

Read More : GIS - K - PG

Kellogg’s Corn Flakes vs. Cheerios – Let Your Taste Buds Decide

Bidness Etc takes a look at the long and interesting history behind Kellogg’s and Cheerios’ rivalry. With more than 100 years of experience each, Kellogg and General Mills are considered the modern pioneers of the cereal industry

Read More : K - GIS

Kellogg – A Cereal Fall In Revenues

The Kellogg Company’s (K) stock price rose 2% after the company announced a planned reduction of 7% in its global workforce by 2017. This announcement was made in its 3QFY13 earnings release on November 5 which beat consensus estimates. However, the company’s growth prospects remain bleak. Its sales in North America are declining as demand for its core product, cereals, is falling and negatively affecting the company’s US Morning Foods and US Snacks segments. Furthermore, its international expansion plans may be in trouble due to a possible shortage of funding, despite the company’s cost-cutting program, Project K.

Beat Estimates and Stock Price Rises

Kellogg’s reported earnings per share (EPS) of $0.90, besting analyst estimates by 4.7%. Sales revenues however, barely matched estimates, and internal revenue growth was just 0.5%. Following the earnings report and the job-cut announcement, the share price initially crept up 2% but then fell back to unchanged level.

Read More : GIS - K

Kellogg Serves up Breakfast While P&G Serves Smiles

The Procter & Gamble Company (P&G), the leader in the global household and personal products industry and cereal manufacturer Kellogg Company (K) plan to join hands to give back to society this holiday season. P&G has recently launched its Power a Smile program and Kellogg has launched a social initiative called Breakfasts for Better Days™. The programs are a part of the corporate social responsibility initiatives of both companies aimed at improving their involvement with society.

Power a Smile Program

P&G’s Duracell® brand launched its Power a Smile program last month on November 22 under which it aims to donate up to a million batteries to the Toys for Tots program, which distributes new toys to less fortunate children every year during the holiday season. The brand will donate one battery from each Duracell Quantum AA 12-pack or CopperTop Alkaline AA 16-pack purchased by customers from the launch of the program up until December 27 this year.

Read More : PG - K - XLP

Buy General Mills for Dividends, Avoid Kellogg

If an investor has to choose between General Mills, Inc. (GIS) and the Kellogg Company (K) on the basis of whichever of the two pays sustained and incremental dividends, Bidness Etc recommends General Mills. Here are our reasons.

General Mills has a long history of returning value to shareholders, having paid out dividends for the past 115 years at stable or incremental rates. Even though Kellogg also has a long history of paying out dividends (it has done so for the past 89 years), the company has reduced dividend payments at various times in its history.

Kellogg increased its quarterly dividends by 4.6% this year to $0.46, while General Mills increased its payout by a much larger 15.2% to $0.38. Similarly, over the last three years, General Mills’ dividends grew, on average, nearly 11% every year – in contrast, Kellogg’s investors received only 5% more in dividends every year over the same period.

And although both companies currently have the same 12-month dividend yield (2.8%), we expect stable and higher dividends in the future from General Mills, given its healthy cash flows from operations, lower debt-to-equity ratio, and ability to cover dividend payments with existing reserves.

Read More : GIS - K