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WK Kellogg Co (KLG)
NYSE:KLG
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WK Kellogg Co (KLG) AI Stock Analysis

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KLG

WK Kellogg Co

(NYSE:KLG)

Rating:57Neutral
Price Target:
$23.50
▲(1.82%Upside)
WK Kellogg Co's score is primarily affected by financial performance challenges, notably high leverage and negative cash flow. While technical indicators show mixed signals, valuation concerns due to a high P/E ratio also weigh on the score. Strategic moves and consumer trends provide some optimism, but the current financial outlook remains cautious.
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.
Regulatory Approval
There is a high probability of the deal receiving regulatory approval, which led to an increased price target for WK Kellogg.
Negative Factors
Financial Performance
WK Kellogg announced that 2Q sales and EBITDA both missed expectations, with sales down by 9% and EBITDA down by 42%.
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 (KLG) vs. SPDR S&P 500 ETF (SPY)

WK Kellogg Co Business Overview & Revenue Model

Company DescriptionWK 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 MoneyWK 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 Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 34.26%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented both positive strategic adjustments and challenges in the current market environment. While there are promising consumer trends and strategic investments, issues with market share and profit outlook indicate balanced prospects.
Q1-2025 Updates
Positive Updates
Consumer Interest in Health and Wellness Brands
Notable rapid acceleration in consumer interest in health and wellness brands within the ready-to-cereal category, marked by new product launches like the Kashi relaunch and mainstream brand campaigns focusing on fiber.
Strategic Adjustments in Manufacturing
Adjusted manufacturing plans to align with revised demand forecasts, expected to stabilize gross margin performance in the back half of the year.
Distribution Gains and Strategic Investments
Incremental investment in brands and distribution gains in key channels are expected to positively impact the top line in the back half of the year.
Supply Chain Modernization on Schedule
The supply chain modernization program is on schedule and on budget, with two of the eight work streams completed, expected to deliver significant gross margin improvements by 2026.
Negative Updates
Gross Margin Contraction Expected
Gross margin contraction anticipated in the second quarter as adjustments are made to manufacturing plans.
Challenges with Special K Brand
Special K experienced a loss of 40 basis points in market share, with a need for stronger focus on health orientation and nutrient density.
Category Performance and Market Share
The category in the U.S. and Canada is performing in line with expectations, but the company is working to get back in line with category performance to improve market share.
Profit Outlook for 2025 Revised Downward
The profit outlook for 2025 has been revised downward, with expectations for profitability delayed into 2026.
Company Guidance
In the first quarter earnings call for 2025, WK Kellogg Co provided several forward-looking statements and metrics. The company noted a rapid acceleration in consumer interest in health and wellness brands within the ready-to-eat cereal category, attributing this to a broader consumer focus on value and nutrition. In response, WK Kellogg Co is preparing a series of initiatives, including the relaunch of Kashi and campaigns focused on fiber across mainstream brands. The company adjusted its manufacturing plan and top-line estimate, anticipating a gross margin contraction primarily in the second quarter, but expects to stabilize inventory and margins in the latter half of the year. The category's performance aligns with WK Kellogg Co's expectations, with a stable top-line growth projection of minus one to plus one percent, supporting a long-term EBITDA margin expansion of 500 basis points by the end of 2026. Despite current challenges, the company remains confident in its strategy, with incremental investments in brands and distribution gains expected to enhance 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
65
Positive
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
58
Neutral
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
45
Neutral
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.71B2.76B2.67B2.46B2.87B
Gross Profit797.00M754.00M633.00M576.00M835.00M
EBITDA198.00M221.00M42.00M283.00M265.00M
Net Income72.00M110.00M-63.00M162.00M182.00M
Balance Sheet
Total Assets1.96B1.89B1.44B1.24B1.26B
Cash, Cash Equivalents and Short-Term Investments40.00M89.00M-8.00M-8.00M0.00
Total Debt648.00M499.00M8.00M8.00M0.00
Total Liabilities1.65B1.59B749.00M674.00M765.00M
Stockholders Equity317.00M300.00M687.00M570.00M494.00M
Cash Flow
Free Cash Flow-29.00M272.00M-18.00M-68.00M216.00M
Operating Cash Flow100.00M422.00M53.00M7.00M303.00M
Investing Cash Flow-129.00M-146.00M-71.00M-75.00M-87.00M
Financing Cash Flow-16.00M-188.00M18.00M68.00M-216.00M

WK Kellogg Co Technical Analysis

Technical Analysis Sentiment
Positive
Last Price23.08
Price Trends
50DMA
18.65
Positive
100DMA
18.58
Positive
200DMA
18.20
Positive
Market Momentum
MACD
1.39
Positive
RSI
74.84
Negative
STOCH
31.40
Neutral
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 23.08 is above the 20-day moving average (MA) of 22.25, above the 50-day MA of 18.65, and above the 200-day MA of 18.20, indicating a bullish trend. The MACD of 1.39 indicates Positive momentum. The RSI at 74.84 is Negative, neither overbought nor oversold. The STOCH value of 31.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KLG.

WK Kellogg Co Risk Analysis

WK Kellogg Co disclosed 47 risk factors in its most recent earnings report. WK Kellogg Co 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

WK Kellogg Co Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$930.88M3.33-31.74%-2.45%100.59%
68
Neutral
$2.20B29.008.20%2.73%0.49%-12.32%
64
Neutral
$22.84B13.40-0.89%3.13%3.00%-17.67%
61
Neutral
$984.75M49.831.34%-1.52%
61
Neutral
$1.93B66.372.56%1.94%-0.09%316.21%
57
Neutral
$1.99B35.7917.70%2.82%-3.13%-51.41%
46
Neutral
$618.95M-23.58%2.38%-30.88%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KLG
WK Kellogg Co
23.08
6.28
37.38%
HLF
Herbalife
9.14
-0.43
-4.49%
JJSF
J & J Snack Foods
114.09
-41.79
-26.81%
THS
TreeHouse Foods
19.50
-18.83
-49.13%
UTZ
UTZ Brands
13.64
-2.29
-14.38%
WEST
Westrock Coffee
6.54
-2.75
-29.60%

WK Kellogg Co Corporate Events

M&A TransactionsDividendsFinancial Disclosures
WK Kellogg Co Updates Q2 2025 EBITDA Results
Neutral
Jul 31, 2025

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.

The most recent analyst rating on (KLG) stock is a Sell with a $16.00 price target. To see the full list of analyst forecasts on WK Kellogg Co stock, see the KLG Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
WK Kellogg Co Announces Merger with Ferrero
Positive
Jul 10, 2025

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.

The most recent analyst rating on (KLG) stock is a Sell with a $16.00 price target. To see the full list of analyst forecasts on WK Kellogg Co stock, see the KLG Stock Forecast page.

Executive/Board ChangesShareholder MeetingsFinancial Disclosures
WK Kellogg Co Reports Q1 2025 Financial Decline
Negative
May 6, 2025

On May 1, 2025, WK Kellogg Co held its Annual General Meeting, where Michael Corbo, Ramón Murguía, and Mindy Sherwood were re-elected as directors. Additionally, an advisory resolution to approve executive compensation and the ratification of PwC as the independent accounting firm were approved. On May 6, 2025, the company reported a 6.2% decrease in net sales and a 45.5% drop in net income for the first quarter of 2025, leading to a revised financial outlook for the year. Despite these challenges, the company remains focused on strategic priorities and sees positive consumer trends towards health and nutrition.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 11, 2025