Resources

K – Market expectations are for record-high Uniform ROA, but management may be concerned about their investments, warehouse logistics, and cereal products

June 30, 2020

  • Kellogg Company (K:USA) is currently trading near recent averages relative to UAFRS-based (Uniform) earnings, with a 24.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their brand investments, warehouse logistics, and cereal products

  • Specifically, management may have concerns about their investments in targeted brands and categories, reduced commercial activation and innovation activity, and the impact of pandemic-related shutdowns. In addition, they may lack confidence in their ability to increase their incremental warehouse space and transportation, sustain Pringles consumption trends in Germany, Spain, and Russia, and revise their commercial plans due to the cancellation of major marketing events. Furthermore, they may be exaggerating the performance of their cereal products and the strength of their liquidity position, and they may be concerned about the unfavorable price/mix of Multipro growth in West Africa

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email client.relations@valens-research.com.

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683