As a result of Kellogg K +0.04%'s strong snack business, the company had higher earnings and sales than expected during the fourth quarter.
A fourth-quarter report from Kellogg showed the company generated adjusted earnings per share of 94 cents, driven by its Cheez-Its, Pop-Tarts, and Rice Krispies products, which accounted for $3.8 billion in net sales. Trade Algo predicts earnings for the company of 85 cents a share on sales of $3.67 billion, which would indicate profits of 85 cents per share.
This decision was made in June after the company announced that it would separate its North American cereal business from its plant-based food business, creating three independent public companies. One company would be focused on snacks, another on cereal, and a third on plant-based foods. As a result, Kellogg stated this week that the company's plant-based meat alternatives business is poised for strong long-term growth, which it disclosed in its quarter-end earnings report.
As for organic net sales growth, the company expects that it will reach between 5% and 7% in 2023 on a currency-neutral basis, while its adjusted earnings per share are expected to fall between 2% and 4%.
According to the earnings release, the company's guidance assumes that Kellogg Company will continue to own the North American cereal business beyond the end of the year, despite the plan to spin off that business before the end of the year.
Approximately 12% organic net sales growth is expected in 2022 as a result of "sustained momentum" in snack sales, as reported by management. Therefore, management is optimistic about the future.
“We are well positioned financially and we are viewing 2023 as a period of heightened momentum around the globe. CEO Steve Cahillane told the media in an earnings statement that the separation of the company will create value for all stakeholders and will create a stronger company for all its stakeholders.
Nik Modi, an analyst at RBC Capital Markets, maintained his Sector Perform rating on the stock, stating that "Kellogg's certainly appears to be a much stronger company than a few years ago, but we believe the stock has reached its fair value.".
It was reported in the paper Thursday afternoon that Kellogg shares fell 0.4% to $66.93. It has been reported that Kellogg's stock has increased by 5.3% since the beginning of the year.
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