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Kellanova (K)
NYSE:K
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Kellanova
(NYSE:K)73Outperform
Positive Factors
EBIT Margin
The EBIT margin improved by 200 basis points year-over-year to 13.6%, driven by lower SG&A expenses.
Sales Performance
Organic sales growth outperformed expectations with a 6.1% year-over-year increase compared to the estimated 3.3%.
Negative Factors
Gross Margin
The gross margin of 33.9% was below the expected 34.6%, impacting the gross profit negatively.
Kellanova (K) vs. S&P 500 (SPY)
Market Cap
$28.43B
Dividend Yield2.73%
Average Volume (3M)2.45M
Price to Earnings (P/E)21.2
Beta (1Y)0.12
Revenue Growth-16.16%
EPS Growth41.01%
CountryUS
Employees23,000
SectorConsumer Defensive
Sector Strength73
IndustryConsumer Products - Foods
Share Statistics
EPS (TTM)3.87
Shares Outstanding345,215,900
10 Day Avg. Volume2,423,137
30 Day Avg. Volume2,454,637
Financial Highlights & Ratios
PEG Ratio0.52
Price to Book (P/B)N/A
Price to Sales (P/S)2.24
Price to Cash Flow (P/CF)15.30
P/FCF Ratio10.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$80.93Price Target Upside-1.74% Downside
Rating ConsensusHold
Number of Analyst Covering7
Kellanova Business Overview & Revenue Model
Company DescriptionKellanova (K) is a prominent leader in the global food industry, specializing in the production of a wide range of packaged foods. The company operates in sectors such as cereal, snacks, and convenience foods, offering core products that include ready-to-eat cereals, snacks, and other packaged food items. Kellanova is renowned for its iconic brands that have a significant presence in households worldwide.
How the Company Makes MoneyKellanova makes money through a diverse revenue model primarily driven by the sale of its packaged food products. The company's key revenue streams include retail sales to grocery stores, supermarkets, and other food retailers, as well as direct-to-consumer sales through online platforms. Kellanova also earns revenue from strategic partnerships and licensing agreements that allow it to expand its brand reach and product offerings. Additionally, the company leverages its global supply chain and efficient production processes to maintain profitability and competitive pricing, contributing to its financial success.
Kellanova Financial Statement Overview
Summary
Kellanova demonstrates strong profitability with healthy EBIT and EBITDA margins and excellent cash flow management. However, the company faces challenges with declining revenue and high leverage, requiring careful debt management.Income Statement
Kellanova's income statement shows a strong net profit margin of 10.54% for 2024, indicating effective cost management and revenue generation. The gross profit margin is exceptionally high at 100% in 2024, likely due to reporting issues, but historically closer to 30-35%. Revenue has declined over the years, with a notable drop from $15.3 billion in 2022 to $12.7 billion in 2024, reflecting a negative trend. However, EBIT and EBITDA margins remain healthy, suggesting operational efficiency.75
Positive
Balance Sheet
The balance sheet reveals a debt-to-equity ratio of 1.68 in 2024, highlighting significant leverage. Stockholders' equity has increased, reaching $3.78 billion, contributing to a moderate equity ratio of 24.15%. Return on equity (ROE) is strong at 35.57%, indicating effective use of equity to generate profits. However, the high leverage poses potential financial risks if not managed properly.68
Positive
Cash Flow
Kellanova's cash flow is strong, with an operating cash flow to net income ratio of 1.31 in 2024, signifying good cash conversion from earnings. Free cash flow has also grown significantly to $1.76 billion in 2024. The free cash flow to net income ratio is robust at 1.31, indicating efficient cash management and the ability to fund operations and growth without external financing.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 12.80B | 12.75B | 13.12B | 15.31B | 14.18B | 13.77B | Gross Profit |
| 4.48B | 12.75B | 4.28B | 4.62B | 4.56B | 4.73B | EBIT |
| 1.69B | 1.87B | 1.50B | 1.64B | 1.75B | 1.76B | EBITDA |
| 1.89B | 1.87B | 1.76B | 1.64B | 2.05B | 2.25B | Net Income Common Stockholders |
| 1.00B | 1.34B | 951.00M | 960.00M | 1.49B | 1.25B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 694.00M | 694.00M | 274.00M | 299.00M | 286.00M | 435.00M | Total Assets |
| 15.63B | 15.63B | 15.62B | 18.50B | 18.18B | 18.00B | Total Debt |
| 6.34B | 6.34B | 6.53B | 7.17B | 7.73B | 8.11B | Net Debt |
| 5.65B | 5.65B | 6.25B | 6.87B | 7.44B | 7.68B | Total Liabilities |
| 11.75B | 11.75B | 12.25B | 14.12B | 13.96B | 14.36B | Stockholders Equity |
| 3.77B | 3.77B | 3.17B | 3.94B | 3.72B | 3.11B |
| Cash Flow | Free Cash Flow | ||||
| 927.00M | 1.76B | 968.00M | 1.16B | 1.15B | 1.48B | Operating Cash Flow |
| 1.54B | 1.76B | 1.65B | 1.65B | 1.70B | 1.99B | Investing Cash Flow |
| -679.00M | -750.00M | -562.00M | -448.00M | -528.00M | -585.00M | Financing Cash Flow |
| -1.41B | -607.00M | -1.11B | -1.08B | -1.31B | -1.39B |
Kellanova Technical Analysis
Positive
82.36
Price Trends
81.21
Positive
80.52
Positive
73.62
Positive
Market Momentum
0.33
Negative
67.27
Neutral
29.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For K, the sentiment is Positive. The current price of 82.36 is above the 20-day moving average (MA) of 81.86, above the 50-day MA of 81.21, and above the 200-day MA of 73.62, indicating a bullish trend. The MACD of 0.33 indicates Negative momentum. The RSI at 67.27 is Neutral, neither overbought nor oversold. The STOCH value of 29.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for K.
Kellanova Risk Analysis
Kellanova disclosed 43 risk factors in its most recent earnings report. Kellanova reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kellanova Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $84.45B | 19.07 | 17.12% | 2.72% | 1.18% | -5.47% | |
75 Outperform | $6.41B | 19.24 | 10.08% | ― | 7.32% | 34.44% | |
73 Outperform | $28.43B | 21.22 | 35.58% | 2.73% | -16.16% | 41.01% | |
72 Outperform | $33.70B | 13.30 | 28.29% | 3.85% | -1.48% | 11.45% | |
70 Outperform | $12.02B | 21.96 | 14.94% | 3.63% | 6.34% | -30.58% | |
68 Neutral | $37.43B | 13.87 | 5.58% | 5.11% | -2.98% | -2.22% | |
63 Neutral | $20.85B | 13.27 | -10.88% | 7.48% | 1.13% | 11.50% |
* Consumer Defensive Sector Average
Performance Comparison
K
Kellanova
82.36
30.54
58.93%
CPB
Campbell Soup
40.33
-1.20
-2.89%
GIS
General Mills
61.14
-1.03
-1.66%
POST
Post Holdings
112.67
9.42
9.12%
MDLZ
Mondelez International
65.29
-3.68
-5.34%
KHC
Kraft Heinz
30.98
-2.54
-7.58%
Kellanova Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 1.30% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The sentiment of the earnings call is positive overall, driven by strong growth in North America and Latin America, significant margin improvements, successful innovation launches, and a raised full-year guidance. However, challenges remain in Nigeria due to currency issues and in Europe due to market elasticity.Highlights
Strong North America Volume Growth
North America saw a return to volume growth in Q2, with improved sequential performance. Pringles led this growth with increased distribution and innovation.
Raised Full Year Guidance
Kellanova raised its full-year guidance for organic net sales growth to about 3.5% and adjusted operating profit to $1.85 billion to $1.9 billion, reflecting better-than-expected first-half performance.
Significant Margin Improvement
Operating profit margin improved, with a target of 15% by 2026. The gross profit margin increased by close to 340 basis points year-on-year in Q2.
Innovation Rebound
Kellanova launched significant innovations, such as Pringles Mingles in North America, contributing to increased consumer engagement and expected sales growth.
Latin America Performance
Organic net sales in Latin America increased by 4%, driven by growth in both snacks and cereal, particularly in Mexico.
Lowlights
Nigeria Volume Decline
Substantial volume declines in Nigeria due to currency-driven price increases, which accounted for most of the company's overall volume decline in Q2.
European Market Challenges
Organic net sales in Europe declined slightly by less than 1% in Q2, facing tough market conditions and high elasticity in cereal categories.
Inflationary Pressures
The company faced inflationary pressures, particularly in Nigeria, impacting cost structures and necessitating further price increases.
Company Guidance
In the second quarter of 2024, Kellanova reported strong financial performance and provided updated guidance for the year. The company achieved a 4% organic growth in net sales, with a 16% increase in currency-neutral adjusted operating profit, and a 14% growth in earnings per share on a currency-neutral basis. Free cash flow also improved year-on-year. Kellanova raised its full-year guidance, now anticipating organic net sales growth of about 3.5%, with adjusted operating profit expected to fall between $1.85 billion and $1.9 billion. The guidance reflects a gross margin target of over 35% and an operating margin of about 14% for 2024, with a goal of reaching a 15% operating margin by 2026. The company's performance was driven by innovation, increased brand investment, and improved profit margins, particularly in North America, where volume growth returned.Kellanova Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Kellanova Aligns Executive Compensation with Long-Term Goals
Positive
Feb 27, 2025
On February 21, 2025, Kellanova’s Board of Directors made compensation decisions for its executive officers, involving the issuance of restricted stock units (RSUs). The independent board members approved RSU grants for several executives, with vesting conditions set for three years from the grant date. This move reflects Kellanova’s commitment to aligning executive compensation with long-term company performance, potentially impacting stakeholder interests by incentivizing leadership to focus on sustained growth.
Private Placements and FinancingBusiness Operations and Strategy
Kellanova Secures New $750 Million Credit Facility
Positive
Dec 12, 2024
Kellanova, a Delaware corporation, has entered into a new unsecured 364-Day Credit Facility with a consortium of major banks, allowing it to borrow up to $750 million. This agreement replaces an existing facility and includes customary financial covenants and events of default. The move is expected to enhance the company’s financial flexibility and maintain its strong market positioning, with no borrowings outstanding under the new arrangement at the time of the announcement.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.