Kellogg’s (K) Q2 Earnings & Sales Top Estimates, 2022 View Raised

Kellogg Company K delivered strong results in the second quarter of 2022, with both top and bottom results exceeding the Zacks consensus estimate. Profits and net sales increased year over year. Given the better-than-expected first-half results, underlying momentum and revenue growth management action, the company raised its guidance for 2022.

Kellogg saw strong momentum in snacks and emerging markets during the quarter. He accelerated the recovery of supply and category share across the North American grain business while leveraging productivity initiatives as well as managing revenue growth in a challenging environment. increasing inflation of input costs. Additionally, the company is on track with its recently announced proposal to separate the grain and crop businesses in North America. The company expects to close it by the end of 2023.

Kellogg’s Company Price, Consensus, and EPS Surprise


Kellogg Company price-consensus-eps-surprise-chart | Kellogg Company Quote

Quarter in detail

Kellogg reported adjusted earnings of $1.18 per share, higher than Zacks consensus estimate of $1.05 and our estimate of $1.03. Net income increased 3.5% year-on-year. At constant or cc exchange rates, adjusted earnings per share jumped 7.9% to $1.23.

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The company reported net sales of $3,864 million, beating Zacks consensus estimate of $3,644.6 million and our estimate of $3,662.1 million. Turnover increased by 8.7% over one year. Net sales growth was supported by a favorable price/mix ratio and market momentum in snacks, noodles and other cereals as well as international cereals, as well as a faster than expected rebound for cereals in the Americas North. These factors more than offset the effects of unfavorable exchange rates and price elasticity. Organic revenue (excluding currency effects) increased by more than 12%.

Adjusted operating profit rose 6.5% to $529 million, while the same rose 9.9% to $546 million at cc.

Sector discussion

Sales in the North America was $2,249 million, up 11.8% year-on-year. The metric edged out Zacks’ consensus mark of $2,054 million and our estimate of $2,013 million. The increase in sales can be attributed to favorable growth in the price/mix of revenue management stocks. In addition, volume growth associated with the dynamics of the snacks market as well as the faster-than-expected recovery of shipments and share of cereals in North America were advantages. Net sales increased by 12.2% on an organic basis.

The income in the Europe totaled $598 million, down 3.3% year-over-year as unfavorable foreign exchange rates more than offset price-to-mix and net sales momentum in snacks and cereals. The metric was behind Zacks’ consensus mark of $605.6 million and our estimate of $653.2 million. Nevertheless, organic revenue jumped 7.7%.

Income in Latin America totaled $288 million, up 8.2% year-over-year, supported by strong price/mix and net sales momentum in snacks. Unfavorable exchange rates were a concern. The metric edged out Zacks’ consensus mark of $280.6 million and our estimate of $285.9 million. Organic sales increased by 9%.

The income in the Asia-Pacific, Middle East and Africa totaled $732 million, up 11.2% year-over-year, driven by favorable price/mix and sales momentum in snacks, noodles and others as well as cereals. Unfavorable exchange rates were a concern. Revenue exceeded Zacks’ consensus of $711.9 million and our estimate of $710 million. Organic sales increased by 18.4%.

Other finance

Kellogg ended the quarter with cash and cash equivalents of $323 million, long-term debt of $5,838 million and total equity of $4,558 million. The company generated cash flow from operating activities of $805 million for the year-to-date ended July 2, 2022. Capital expenditures were $267 million, which generated cash flow of $538 million.

Net cash provided by operating activities is expected to reach nearly $1.8 billion in 2022, while cash flow is estimated at around $1.2 billion. The company expects to incur capital expenditures of nearly $0.6 billion in 2022.
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Orientation 2022

Given its strong first half performance, underlying trends and confidence in its plans for the second half of 2022, management has raised its guidance for 2022.

Organic growth in net sales in 2022 is now estimated at 7-8%, compared to growth of nearly 4% previously expected. The increase in view reflects better-than-expected growth in the first half of the year, stocks related to managing revenue growth as well as impressive momentum in the market, particularly in snacks and snacks. Emerging Markets.

Adjusted operating profit is expected to grow 4-5% at cc, up from the previous view of a 1-2% improvement at cc. Management expects adjusted earnings per share (EPS) to grow nearly 2% at cc, up from previous expectations of 1-2% growth at cc. The view envisions better prospects for operating profit.

Kellogg currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 5.3% in the past three months against an industry decline of 0.6%.

3 hot base bets

Some higher ranked stocks are United Natural Foods UNFI, The Chef’s Warehouse CHIEF and GeneralMills, Inc. GIS.

United Natural Foods distributes natural, organic, specialty, produce, and conventional grocery and non-food products. UNFI currently sports a Zacks rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for UNFI’s current-year sales suggests growth of 7.6% from numbers reported a year ago. United Natural Foods has a four-quarter earnings surprise of 29.9% on average.

Chef’s Warehouse, a specialty food retailer in the United States, currently has a Zacks #1 ranking. CHEF has a surprise on earnings for the last four quarters of 355.9% on average.

Zacks’ consensus estimate for Chef Warehouse’s current-year sales suggests growth of 40.7% from numbers reported a year ago.

General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks rating of 2 (buy). GIS has a surprise on earnings for the last four quarters of 6.5% on average.

Zacks’ consensus estimate for General Mills’ sales and earnings per share for the current fiscal year suggests growth of nearly 2% and 1.5%, respectively, from corresponding figures released a year ago. year.

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