We expect cereal maker,
) to beat expectations when it reports fourth quarter 2012
results on Feb 5 before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that Kellogg is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Kellogg's Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) stands at +6.15%. This is very meaningful and a leading
indicator of a likely positive earnings surprise for shares.
Zacks #2 Rank (Buy):
Kellogg currently carries a Zacks Rank # 2 (Buy). Note that
stocks with Zacks Ranks of #1, #2 and #3 have a significantly
higher chance of beating earnings. The sell rated stocks (#4 and
#5) should never be considered going into an earnings
The combination of the stock's Zacks Rank #2 (Buy) and +6.15%
ESP makes us confident of an earnings beat on Feb 2.
What is Driving the Better Than Expected Earnings?
Kellogg's improving revenue trends in North America, increased
brand investments and cost-saving efforts, especially its
supply-chain initiatives are expected to lead to a positive
earnings surprise in the current quarter. Moreover, the addition
of Pringles, acquired from
Procter & Gamble Inc
) in June last year, is expected to boost sales growth.
Kellogg has beaten the Zacks Consensus Estimates in 4 straight
quarters with an average earnings surprise of 4.27%. Estimates
are mostly seeing an upward trend ahead of the fourth quarter
Other Stocks to Consider
Kellogg is not the only bullish firm this earnings season. We
also see likely earnings beats coming from the following industry
J&J Snack Foods Corp.
): Earnings ESP of +5.0% and Zacks Rank #1 (Strong Buy).
Flowers Foods, Inc.
): Earnings ESP of +4.0% and Zacks Rank #1 (Strong Buy).
FLOWERS FOODS (FLO): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
KELLOGG CO (K): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
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