Kellogg’s stock climbs as sales are the best forecast for snack growth
climbed on Thursday after the food company reported first-quarter earnings and revenue that beat Wall Street expectations, and it raised its sales growth forecast for 2022.
Kellogg (ticker: K) reported adjusted earnings of $1.23 per share, beating estimates by 93 cents, according to FactSet. The company also reported net sales of $3.67 billion; sales estimated by analysts at $3.59 billion.
The company attributed the sales growth to continued momentum in snack growth globally.
For 2022, Kellogg raised its guidance for organic net sales growth to around 4%, above the previous guidance of 3%, which the company says “reflects the momentum of its business, particularly snacks.” scale and noodles in Africa, as well as higher price/mix growth needed to cover incremental cost inflation in the economy.
The company also reaffirmed its earnings and operating profit guidance for 2022.
“Our strong start to the year, coupled with good sales momentum, allows us to affirm earnings guidance even though the outlook has deteriorated for cost inflation and additional business disruptions, including impacts related to the war in Ukraine,” said Steve Cahillane, CEO of Kellogg.
Despite the beaten earnings and revenue for the quarter, Stifel analyst Christopher Growe maintained his Hold rating and $67 price target on the stock.
“The stocks are trading 10% below their packaged food counterparts, which we think is appropriate, although we expect limited upside from this level, particularly given rising input cost inflation. and difficult comparisons with high food consumption at home the previous year,” Growe wrote in a research note.
However, Growe sees upside potential in the company’s short-term outlook.
“Kellogg’s business continues to benefit from high at-home food consumption in this Covid/lockdown environment, and the company is achieving pricing to offset input cost inflation,” he added.
Kellogg shares rose 4% on Thursday to $70.56. The stock has gained 9.1% since the start of the year.
Write to Angela Palumbo at [email protected]