Kellanova (K) AI Stock Analysis

• Market Cap: $28.93B
• Dividend Yield: 2.76%
• Average Volume (3M): 2.36M
• Price to Earnings (P/E): 22.8
• Beta (1Y): <0.01
• Revenue Growth: -1.01%
• EPS Growth: 25.47%
• Country: US
• Employees: 24,000
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Food Confectioners
• EPS (TTM): 0.93
• Shares Outstanding: 347,932,620
• 10 Day Avg. Volume: 2,847,553
• 30 Day Avg. Volume: 2,356,396
• PEG Ratio: 0.51
• Price to Book (P/B): 7.38
• Price to Sales (P/S): 2.18
• P/FCF Ratio: 24.59
• Enterprise Value/Market Cap: 1.15
• Enterprise Value/Revenue: 2.63
• Enterprise Value/Gross Profit: 7.56
• Enterprise Value/Ebitda: 14.85
• 1Y Price Target: $83.40
• Price Target Upside: -0.05% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: $91.00 ▲(9.06% Upside)

Kellanova's overall stock score is driven by strong financial performance and moderate valuation. The technical analysis indicates a positive trend, but the overbought RSI suggests caution. The acquisition by Mars is a strategic positive, although not factored into the score due to overlap with earnings call analysis.

Positive Factors

Strategic Acquisition

The acquisition by Mars is a strategic move that will enhance Kellanova's market positioning and operational capabilities, potentially increasing its global reach and revenue generation.

Brand Portfolio

A diverse product portfolio with well-known brands allows Kellanova to cater to varied consumer preferences and maintain a strong market presence, supporting long-term revenue stability.

Profitability

Consistent profitability and strong margins indicate effective cost management and pricing power, which are crucial for sustaining long-term financial health and competitiveness.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, especially if interest rates rise or if the company faces unexpected downturns, impacting long-term stability.

Declining Free Cash Flow

A decline in free cash flow growth can hinder the company's ability to invest in new opportunities, pay down debt, or return capital to shareholders, affecting future growth prospects.

Revenue Growth Challenges

While past revenue growth has been strong, challenges in maintaining this trend due to financial constraints could impact long-term expansion and market competitiveness.

Kellanova Business Overview & Revenue Model

Company Description

Kellanova, together with its subsidiaries, manufactures and markets snacks and convenience foods in North America, Europe, Latin America, the Asia Pacific, the Middle East, Australia, and Africa. Its principal products consist of snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars, and bites; and convenience foods, including ready-to-eat cereals, frozen waffles, veggie foods, and noodles; and crisps. The company offers its products under the Kellogg's, Cheez-It, Pringles, Austin, Parati, RXBAR, Eggo, Morningstar Farms, Bisco, Club, Luxe, Minueto, Special K, Toasteds, Town House, Zesta, Zoo Cartoon, Choco Krispis, Crunchy Nut, Kashi, Nutri-Grain, Squares, Zucaritas, Rice Krispies Treats, Sucrilhos, Pop-Tarts, K-Time, Sunibrite, Split Stix, LCMs, Coco Pops, Krave, Frosties, Rice Krispies Squares, Incogmeato, Veggitizers, Gardenburger, Trink, Carr's, Kellogg's Extra, Müsli, Fruit ‘n Fibre, Kellogg's Crunchy Nut, Country Store, Smacks, Honey Bsss, Zimmy's, Toppas, Tresor, Froot Ring, Chocos, Chex, Guardian, Just Right, Sultana Bran, Rice Bubbles, Sustain, Choco Krispies, Melvin, Cornelius, Chocovore, Poperto, Pops the Bee, and Sammy the Seal brand names. It sells its products to retailers through direct sales forces, as well as brokers and distributors. The company was formerly known as Kellogg Company and changed its name to Kellanova in October 2023. Kellanova was founded in 1906 and is headquartered in Chicago, Illinois.

How the Company Makes Money

Kellanova generates revenue primarily through the sale of its food products across multiple channels, including retail, e-commerce, and foodservice. Key revenue streams include branded consumer products, which are sold through supermarkets, convenience stores, and online platforms, as well as private label offerings. The company benefits from strong brand loyalty and market share in its core categories. Additionally, Kellanova engages in strategic partnerships with distributors and retailers, enhancing its market reach and promotional capabilities, which further contribute to its earnings.

Kellanova Financial Statement Overview

Summary

Kellanova shows strong revenue growth and profitability with a solid return on equity. However, high leverage and declining free cash flow growth pose potential risks. The company should focus on improving cash conversion and managing debt levels to sustain its financial health.

Income Statement

Kellanova's income statement shows strong profitability with a consistent gross profit margin around 35% and a net profit margin of approximately 10% over the TTM. The company has demonstrated a solid revenue growth rate of 21.4% in the TTM, indicating robust sales performance. However, there is a slight decline in margins compared to previous years, which could be a point of concern if the trend continues.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio of 1.48 in the TTM, which is an improvement from previous years but still indicates significant leverage. The return on equity is strong at 31.9%, showcasing effective use of equity to generate profits. The equity ratio stands at 26.9%, suggesting a moderate reliance on equity financing.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth by 7.8% in the TTM, which could impact future investments. The operating cash flow to net income ratio is low at 0.25, indicating potential challenges in converting income into cash. However, the free cash flow to net income ratio remains healthy at 47.7%, suggesting adequate cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.67B	12.75B	13.12B	12.65B	11.75B	13.77B
Gross Profit	4.41B	4.54B	4.28B	3.81B	3.82B	4.73B
EBITDA	2.25B	2.33B	1.76B	1.58B	2.12B	2.36B
Net Income	1.28B	1.34B	951.00M	960.00M	1.49B	1.25B
Balance Sheet
Total Assets	15.64B	15.63B	15.62B	18.50B	18.18B	18.00B
Cash, Cash Equivalents and Short-Term Investments	240.00M	694.00M	274.00M	299.00M	286.00M	435.00M
Total Debt	6.20B	6.34B	6.53B	7.16B	7.73B	8.11B
Total Liabilities	11.35B	11.75B	12.25B	14.12B	13.96B	14.36B
Stockholders Equity	4.20B	3.77B	3.17B	3.94B	3.72B	3.11B
Cash Flow
Free Cash Flow	599.00M	1.13B	968.00M	1.16B	1.15B	1.48B
Operating Cash Flow	1.25B	1.76B	1.65B	1.65B	1.70B	1.99B
Investing Cash Flow	-639.00M	-750.00M	-562.00M	-448.00M	-528.00M	-585.00M
Financing Cash Flow	-926.00M	-607.00M	-1.11B	-1.08B	-1.31B	-1.39B

Kellanova Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 83.44
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: 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 83.44 is above the 20-day moving average (MA) of 82.94, above the 50-day MA of 82.57, and above the 200-day MA of 80.32, indicating a bullish trend. The MACD of 0.28 indicates Positive momentum. The RSI at 84.05 is Negative, neither overbought nor oversold. The STOCH value of 32.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for K.

Kellanova Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HSY	76 Outperform	$36.97B	27.27	31.01%	3.03%	4.71%	-23.03%
K	70 Outperform	$28.93B	22.77	32.52%	2.76%	-1.01%	25.47%
STZ	67 Neutral	$24.78B	20.78	15.91%	2.84%	-5.57%	119.49%
GIS	64 Neutral	$24.50B	8.70	30.98%	5.30%	-3.26%	25.58%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
MDLZ	62 Neutral	$70.85B	20.51	13.07%	3.53%	4.13%	-5.19%
KHC	48 Neutral	$28.81B	―	-9.73%	6.60%	-3.70%	-431.05%