Kellanova (K), headquartered in Chicago, Illinois, provides snacking, cereal, and noodles, as well as frozen foods. Valued at $20.34 billion by market cap, the company’s brands include Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, RXBAR, Eggo, MorningStar Farms, Special K, and Coco Pops.
Shares of this leader in global snacking have underperformed the broader market over the past year. K has declined 11.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 25.2%. But in 2024, the gap narrowed, with K stock rising 6.6%, while the SPX is up 10.4% on a YTD basis.
Narrowing the focus, K’s underperformance looks less pronounced compared to the iShares Emergent Food and Agtech Multisector ETF (IVEG). The exchange-traded fund has gained about 1.2% over this period. However, the stock’s gains on a YTD basis outshine the ETF’s marginal returns over the same time frame.
On May 2, K shares closed up more than 7% after the company reported its Q1 results. The company’s organic net sales rose 5.4%. Its non-GAAP EPS stood at $1.01, beating a $0.85 estimate, and its revenue of $3.20 billion beat the analyst estimates of $3.16 billion. K also reaffirmed its full-year guidance.
For the current fiscal year, ending in December, analysts expect K’s EPS to grow 12.1% to $3.62 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 17 analysts covering K stock, the consensus rating is a “Hold.” That’s based on two “Strong Buy” ratings and 15 “Holds.”
This configuration is slightly more bullish than three months ago, with one suggesting a “Strong Buy.”
Recently, D.A. Davidson analyst Brian Holland maintained a “Buy” rating on K stock and raised the price target from $67 to $72, implying a potential upside of 20.8% from current levels.
The mean price target of $62.38 represents a 4.7% premium to K’s current price levels. The Street-high price target of $73 suggests an upside potential of 22.5%.
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