Financial Trading Blog
Stock of the day 11/02/2015 – Kellogg Company
The world’s leading cereal producer had a rocky 2014 that eventually saw overall gains on the markets by the year’s close. It started 2014 at $60.95, and a slip around its Q4 2013 results in February saw it reach a low of $55.75, its worst price of the year. From then on it gradually climbed to hit its year high of $69.42 at the start of June. However a weak second quarter earnings release led stocks 7% lower once more to $59.79 followed by a quick rise that was then wiped out by the global slump that plagued the markets in mid-October. By the start of 2015 Kellogg’s had risen to $65.67 after a run prompted by a decent third quarter release, besting its 2014 high by reaching $69.88 near the end of January, and is now trading at $66.29.
The biggest recent news for Kellogg’s is the acquisition of an 85.93% stake in Egypt’s main producer of biscuits and cake Bisco Misr. Bisco Misr is the leading producer of such products in North Africa, and has over 100 different brands; Kellogg’s beat out rivals Abraaj and Savola Group to snap up the majority share in the company. This is just the latest expansion into Africa, as Kellogg’s recently began operations in Kenya, East Africa’s largest economy.
Kellogg’s now makes food products in over 180 countries, and it will likely be overseas sales that provide any boost for the company’s Q4 and full year figures. Weak sales in the first three quarters of 2014 have largely been down to lower demands for cereal in North America, a trend that has been an issue since 2012. It has also recently had issues with the Bakery, Confectionary, Tobacco and Grain Millers (BCTGM) Union, and could lead to the closure of at least one of its US cereal plants if employees don’t reconsider contract changes.
With the looming issue of a stronger dollar casting its shadow over much of this earnings season, the dominant greenback may add a sour note to the Kellogg Company’s end of year results. However, currently analysts are forecasting revenues for the fourth quarter of $3.65 billion, a 4.29% year-on-year increase, whilst earnings per share are expected to rise to $0.93 compared to $0.83 last year, with a full year EPS of $3.90.
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