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Kellogg’s Q2 Results Top Estimates
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Kellogg’s Q2 Results Top Estimates

Kellogg Co. (K) delivered better-than-expected second-quarter results, driven by double-digit growth in emerging markets. The company also raised its full year guidance for net sales, while affirming its guidance for earnings per share.

Net sales grew 2.6% year-over-year in the quarter to $3.56 billion, beating consensus estimates of $3.41 billion. The increase included the impact of favorable currency translation.

That being said, adjusted earnings fell 8.1% year-over-year to $1.14 a share, but this was still better than the Street’s $1.03 forecast.

According to Kellogg CEO Steve Cahillane, solid second-quarter results speak to the resilience and determination of the company as well as the effectiveness of the underlying growth strategy. (See Kellogg stock charts on TipRanks)

Cahillane stated, “We delivered these results amidst a challenging business environment that included pervasive shortages of materials, freight, and labor, and accompanying cost inflation. By executing our strategy, we remain on track to deliver our full-year guidance even as these conditions persist.”

Kellogg expects organic sales to grow at least 0-1% for the full year, an increase from the previous guidance of flat net sales. The company also anticipates adjusted earnings per share to grow 1%-2%, implying a two-year compound annual growth rate of about 5%.

Following the second quarter results, Jefferies analyst Robert Dickerson reiterated a Hold rating on the stock with a $70 price target, implying 11.98% upside potential to current levels.

The analyst warned of emerging market margin mix effects, which could impact its overall improvement.

Consensus among analysts is that Kellogg is a Moderate Buy, based on 4 Buys, 5 Holds, and 1 Sell. The average Kellogg price target of $68.25 implies 9.18% upside potential to current levels.

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