Kellogg (K) Boosts Sales, Profit Forecast

Kellogg (NYSE: K) shares gained in early Thursday trading after the company beat earnings and revenue expectations and boosted guidance.

The food manufacturing company reported earnings of $1.18 per share, beating analyst estimates of $1.04. Revenue for the quarter came in at $3.86 billion versus the consensus estimate of $3.64 billion.

Kellogg has been steadily raising product prices to combat rising costs as inflation soars.

Kellog raised its full-year sales and profit forecast. The company now expects adjusted earnings per share growth to be approximately +2% compared to prior guidance of +1-2%, reflecting the improved operating profit outlook. In addition, organic net sales growth is expected to be +7-8%, compared to prior guidance of approximately 4%, due to better-than-expected growth in the first half, and positive momentum, primarily in snacks and emerging markets.

Kellogg shares rose to $76.45 per share Thursday, their highest level since 2017.

Following the report, Goldman Sachs analyst Jason English maintained a Neutral rating and $76 price target on the stock.

"K reported stronger than expected 2Q22 EPS of $1.18 (vs. GS/FactSet consensus $1.03/$1.05) as robust broad-based organic sales growth was aided by a rare gross margin beat, despite higher than expected SG&A spend," said English.

"Management raised its full year organic outlook to +7-8% (vs. roughly 4% prior and GS/consensus +6.2%/+4.7%) and its constant-FX EBIT and EPS outlook. Using our estimated $0.20 FX headwind for the full year, yields FY22 EPS of $4.05 (vs. GS/consensus $4.06/$4.10). Further, using our estimated $0.14 FX headwind in 2H22 yields a below-consensus $1.76 EPS for 2H22 (vs. GS/consensus $1.93/$1.95), which we believe is likely conservative, given its robust momentum. All-in, we expect the stock to trade higher on the back of strong results and raised outlook," he added.

By Sam Boughedda

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