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Kellanova (K) Rallies on Q2 Earnings Beat, Raised Guidance
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Kellanova (K - Free Report) delivered second-quarter 2024 results, wherein both the top and bottom lines exceeded the Zacks Consensus Estimate, and earnings increased year over year. While sales declined year over year, the company saw an increase in organic sales. Backed by a better-than-expected first half, management pulled up its guidance for 2024. Shares of Kellanova jumped more than 4% in the pre-market trading session on Aug 1.
Kellanova's second-quarter results demonstrate strong performance. Volumes returned to growth in two regions, and the company saw better performance in other markets, backed by its flagship brand, Pringles. This success was bolstered by fully restored commercial activities and a significant increase in brand-building investments, all while improving profit margins. This sustained performance since the company’s spin-off highlights Kellanova's sharper focus, growth orientation and enhanced profitability.
Quarter in Detail
Kellanova reported adjusted earnings of $1.01 per share, which increased 12.2% year over year. On a currency-neutral basis, adjusted earnings per share (EPS) rose 14.4% to $1.03. The upside can be attributed to increased operating profits. The bottom line surpassed the Zacks Consensus Estimate of 90 cents.
The company recorded net sales of $3,192 million, which surpassed the Zacks Consensus Estimate of $3,149 million. However, the top line fell 4.7% year over year. The downside can be attributed to unfavorable currency movements and the divestiture of the company’s Russia business, which offset the favorable price/mix. Organic net sales (excluding currency and divestiture impacts) increased 4%.
Kellanova’s adjusted operating profit increased 13.3% to $502 million while increasing 16.4% to $516 million on a currency-neutral basis.
Segment Discussion
Sales in the North America segment amounted to $1,658 million, up 0.8% year over year and 0.9% on an organic basis due to improved volumes.
Revenues in the Europe segment totaled $639 million, down 4.5% year over year. Volume pressures stemming from elasticity across categories and the divestiture of operations in Russia last year contributed to the downside. However, this impact was partially mitigated by price/mix growth resulting from prior-year actions aimed at offsetting high input cost inflation. Organic net sales dipped 1%.
Revenues in Latin America totaled $333 million, up 2.3% year over year, backed by the favorable price/mix and volumes. Organic sales ascended 4%.
Revenues in the Asia Pacific and the Middle East & Africa segment totaled $564 million, down 20.8% year over year. Unfavorable foreign currency rates caused the downside. However, the favorable price/mix was a breather. Organic sales jumped 16%.
Other Financials
The company ended the reported quarter with cash and cash equivalents of $272 million, long-term debt of $5,007 million and total equity of $3,427 million.
Kellanova generated net cash from operating activities of $740 million for the year-to-date period. Free cash flow was $443 million during this time. Management projects net cash from operating activities to be more than $1.7 billion in 2024, with the free cash flow expected to be more than $1 billion. Capital expenditures are likely to be nearly $0.7 million.
2024 Guidance
Kellanova now expects organic net sales growth of 3.5% or more, driven by snacks brands and emerging markets. The guidance remains within its long-term target range. Earlier, the company projected organic net sales growth of nearly 3% or more.
For 2024, the adjusted operating profit is expected in the band of $1,875-$1,900 million compared with the earlier view of $1,850-1,900 million. The revised view indicates robust currency-neutral growth.
Finally, K envisions adjusted EPS to come in the band of around $3.65-3.75, higher than the previously guided range of $3.55-$3.65. The guidance reflects strong operating profit and other income delivered in the first half.
This Zacks Rank #3 (Hold) stock has risen 5.6% in the past six months compared with the industry’s growth of 2.3%.
Some Better-Ranked Staple Bets
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings indicates growth of 5.8% and 6.3%, respectively, from the prior-year reported levels.
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Kellanova (K) Rallies on Q2 Earnings Beat, Raised Guidance
Kellanova (K - Free Report) delivered second-quarter 2024 results, wherein both the top and bottom lines exceeded the Zacks Consensus Estimate, and earnings increased year over year. While sales declined year over year, the company saw an increase in organic sales. Backed by a better-than-expected first half, management pulled up its guidance for 2024. Shares of Kellanova jumped more than 4% in the pre-market trading session on Aug 1.
Kellanova's second-quarter results demonstrate strong performance. Volumes returned to growth in two regions, and the company saw better performance in other markets, backed by its flagship brand, Pringles. This success was bolstered by fully restored commercial activities and a significant increase in brand-building investments, all while improving profit margins. This sustained performance since the company’s spin-off highlights Kellanova's sharper focus, growth orientation and enhanced profitability.
Quarter in Detail
Kellanova reported adjusted earnings of $1.01 per share, which increased 12.2% year over year. On a currency-neutral basis, adjusted earnings per share (EPS) rose 14.4% to $1.03. The upside can be attributed to increased operating profits. The bottom line surpassed the Zacks Consensus Estimate of 90 cents.
Kellanova Price, Consensus and EPS Surprise
Kellanova price-consensus-eps-surprise-chart | Kellanova Quote
The company recorded net sales of $3,192 million, which surpassed the Zacks Consensus Estimate of $3,149 million. However, the top line fell 4.7% year over year. The downside can be attributed to unfavorable currency movements and the divestiture of the company’s Russia business, which offset the favorable price/mix. Organic net sales (excluding currency and divestiture impacts) increased 4%.
Kellanova’s adjusted operating profit increased 13.3% to $502 million while increasing 16.4% to $516 million on a currency-neutral basis.
Segment Discussion
Sales in the North America segment amounted to $1,658 million, up 0.8% year over year and 0.9% on an organic basis due to improved volumes.
Revenues in the Europe segment totaled $639 million, down 4.5% year over year. Volume pressures stemming from elasticity across categories and the divestiture of operations in Russia last year contributed to the downside. However, this impact was partially mitigated by price/mix growth resulting from prior-year actions aimed at offsetting high input cost inflation. Organic net sales dipped 1%.
Revenues in Latin America totaled $333 million, up 2.3% year over year, backed by the favorable price/mix and volumes. Organic sales ascended 4%.
Revenues in the Asia Pacific and the Middle East & Africa segment totaled $564 million, down 20.8% year over year. Unfavorable foreign currency rates caused the downside. However, the favorable price/mix was a breather. Organic sales jumped 16%.
Other Financials
The company ended the reported quarter with cash and cash equivalents of $272 million, long-term debt of $5,007 million and total equity of $3,427 million.
Kellanova generated net cash from operating activities of $740 million for the year-to-date period. Free cash flow was $443 million during this time. Management projects net cash from operating activities to be more than $1.7 billion in 2024, with the free cash flow expected to be more than $1 billion. Capital expenditures are likely to be nearly $0.7 million.
2024 Guidance
Kellanova now expects organic net sales growth of 3.5% or more, driven by snacks brands and emerging markets. The guidance remains within its long-term target range. Earlier, the company projected organic net sales growth of nearly 3% or more.
For 2024, the adjusted operating profit is expected in the band of $1,875-$1,900 million compared with the earlier view of $1,850-1,900 million. The revised view indicates robust currency-neutral growth.
Finally, K envisions adjusted EPS to come in the band of around $3.65-3.75, higher than the previously guided range of $3.55-$3.65. The guidance reflects strong operating profit and other income delivered in the first half.
This Zacks Rank #3 (Hold) stock has risen 5.6% in the past six months compared with the industry’s growth of 2.3%.
Some Better-Ranked Staple Bets
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings indicates growth of 5.8% and 6.3%, respectively, from the prior-year reported levels.