WK Kellogg Co (KLG) AI Stock Analysis

• Market Cap: $1.98B
• Dividend Yield: 2.83%
• Average Volume (3M): 2.55M
• Price to Earnings (P/E): 55.0
• Beta (1Y): 0.34
• Revenue Growth: -4.30%
• EPS Growth: -69.47%
• Country: US
• Employees: 3,280
• Sector: Consumer Defensive
• Sector Strength: 61
• Industry: Packaged Foods
• EPS (TTM): 0.39
• Shares Outstanding: 86,416,400
• 10 Day Avg. Volume: 892,445
• 30 Day Avg. Volume: 2,553,255
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 0.82
• Enterprise Value/Gross Profit: 2.86
• Enterprise Value/Ebitda: 15.67
• 1Y Price Target: $23.00
• Price Target Upside: 0.04% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 60 Neutral
• Price Target: $24.00 ▲(4.39% Upside)

WK Kellogg Co's overall stock score reflects a mixed financial performance with challenges in profitability and cash flow. However, positive technical indicators and strategic initiatives from the earnings call provide some optimism. The high P/E ratio suggests overvaluation, but the merger with Ferrero could enhance future growth prospects.

Positive Factors

Acquisition

WK Kellogg announced a definitive agreement to be acquired by Ferrero for $23/share in cash, representing a 40% premium to KLG's unaffected 30-day VWAP.

Analyst Recommendation

Analyst recommendation was raised from Sell to Hold.

Market Expansion

Ferrero's acquisition of WK Kellogg is expected to increase its U.S. retail sales significantly, showcasing a strategic expansion in the North American market.

Negative Factors

Earnings Performance

WK Kellogg announced that 2Q sales and EBITDA both missed expectations, with sales down by 9% and EBITDA down by 42%.

Financial Guidance

Management lowered sales guidance by 100-200 bps to -2% to -3%, and EBITDA growth by 600 bps to -2% to 0%.

Market Share

Organic sales declined 5.6% and share declined owing to consumers shifting to healthier options and value shopping.

WK Kellogg Co Business Overview & Revenue Model

Company Description

WK Kellogg Co operates as a food company in the United States, Canada, and the Caribbean. It offers ready-to-eat cereal products primarily under the Frosted Flakes, Special K, Froot Loops, Raisin Bran, Frosted Mini-Wheats, and Kashi brands. The company was formerly known as North America Cereal Co. and changed its name to WK Kellogg Co in March 2023. The company was incorporated in 2022 and is based in Battle Creek, Michigan.

How the Company Makes Money

WK Kellogg Co generates revenue primarily through the sale of its branded food products, including a vast array of breakfast cereals and snacks. The company's revenue streams are driven by its extensive distribution network, which spans retail grocery stores, supermarkets, and other food service channels globally. Key factors contributing to its earnings include strong brand equity, continuous product innovation, and strategic marketing initiatives. Additionally, significant partnerships and collaborations with retailers and suppliers enhance its market reach and operational efficiency, further supporting its financial performance.

WK Kellogg Co Financial Statement Overview

Summary

WK Kellogg Co exhibits stable gross profitability but faces challenges in growth and leverage. High debt levels and decreasing net margins impact financial flexibility. Negative free cash flow poses liquidity risks.

Income Statement

The income statement reveals a mixed performance for WK Kellogg Co. The TTM (Trailing-Twelve-Months) shows a slight decline in revenue compared to previous annual figures. Gross profit margin is stable at around 29.1%, but net profit margin has been under pressure, decreasing to 2.1% TTM from 2.7% annual. There is a notable weakness in revenue growth, indicating challenges in expanding sales.

Balance Sheet

WK Kellogg Co has a debt-to-equity ratio of 2.19 TTM, indicating a high level of leverage, which poses a risk in terms of financial stability. The equity ratio is low at 16.2%, suggesting reliance on debt financing. Return on Equity (ROE) has decreased to 17.4% TTM from 22.7% annual, reflecting reduced profitability relative to shareholder equity.

Cash Flow

Cash flow analysis shows challenges in generating free cash flow, with a negative free cash flow of $92 million TTM. The operating cash flow to net income ratio is 1.54, indicating adequate cash generation relative to net earnings. However, the decline in free cash flow growth and negative free cash flow position highlight liquidity concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.60B	2.71B	2.76B	2.69B	2.46B	2.87B
Gross Profit	750.00M	793.00M	754.00M	633.00M	576.00M	835.00M
EBITDA	137.00M	193.00M	221.00M	42.00M	283.00M	265.00M
Net Income	34.00M	72.00M	110.00M	-25.00M	162.00M	182.00M
Balance Sheet
Total Assets	2.12B	1.96B	1.89B	1.44B	1.24B	1.26B
Cash, Cash Equivalents and Short-Term Investments	120.00M	40.00M	89.00M	-8.00M	-8.00M	0.00
Total Debt	837.00M	648.00M	499.00M	8.00M	9.00M	0.00
Total Liabilities	1.78B	1.65B	1.59B	749.00M	674.00M	765.00M
Stockholders Equity	345.00M	317.00M	300.00M	687.00M	570.00M	494.00M
Cash Flow
Free Cash Flow	-120.00M	-29.00M	272.00M	-18.00M	-68.00M	216.00M
Operating Cash Flow	86.00M	100.00M	422.00M	53.00M	7.00M	303.00M
Investing Cash Flow	-206.00M	-129.00M	-146.00M	-71.00M	-75.00M	-87.00M
Financing Cash Flow	198.00M	-16.00M	-188.00M	18.00M	68.00M	-216.00M

WK Kellogg Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 22.99
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KLG, the sentiment is Positive. The current price of 22.99 is below the 20-day moving average (MA) of 23.07, above the 50-day MA of 20.49, and above the 200-day MA of 18.63, indicating a neutral trend. The MACD of 0.53 indicates Positive momentum. The RSI at 67.30 is Neutral, neither overbought nor oversold. The STOCH value of 14.69 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KLG.

WK Kellogg Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	67 Neutral	S$3.20B	10.78	14.90%	4.58%	7.79%	-10.29%
HLF	63 Neutral	$988.78M	2.96	-31.74%	―	-2.25%	288.79%
JJSF	61 Neutral	$2.22B	26.63	8.79%	2.78%	0.50%	-4.46%
THS	61 Neutral	$934.25M	46.33	1.34%	―	-1.52%	―
UTZ	61 Neutral	$1.83B	63.07	2.56%	2.03%	-0.09%	316.21%
KLG	60 Neutral	$1.98B	54.98	10.87%	2.83%	-4.30%	-69.47%
WEST	46 Neutral	$597.61M	―	-27.07%	―	13.05%	-72.80%

WK Kellogg Co Corporate Events

WK Kellogg Co Updates Q2 2025 EBITDA Results

WK Kellogg Co has updated its preliminary second quarter 2025 Adjusted EBITDA results due to a non-cash error, maintaining its net sales range of $610 million to $615 million. The company announced a merger agreement with Ferrero International S.A., with the merger expected to close in the second half of 2025, pending shareholder and regulatory approvals. Additionally, a dividend of $0.165 per share was declared, payable on September 12, 2025.

WK Kellogg Co Announces Merger with Ferrero

On July 10, 2025, WK Kellogg Co entered into a merger agreement with Ferrero International S.A., where Ferrero will acquire WK Kellogg Co for $23.00 per share in cash, valuing the transaction at $3.1 billion. This acquisition is part of Ferrero’s strategic growth plan to expand its presence in North America and enhance its product offerings with WK Kellogg Co’s iconic cereal brands. The merger, which has been unanimously approved by WK Kellogg Co’s Board of Directors, is expected to close in the second half of 2025, pending shareowner and regulatory approvals. The transaction is anticipated to provide WK Kellogg Co with greater resources and flexibility to grow its brands in a competitive market.