Factors Setting the Stage for Kellogg's (K) Q3 Earnings

Kellogg Company K is scheduled to release third-quarter 2019 results on Oct 29. This renowned convenience food provider has delivered positive earnings surprises in the last three quarters.

Let’s see what’s in store for the company this time around.

What to Expect?

Kellogg Company Price and EPS Surprise

Kellogg Company Price and EPS Surprise

Kellogg Company price-eps-surprise | Kellogg Company Quote

The Zacks Consensus Estimate for earnings in the third quarter has been stable over the past 30 days at 91 cents, which suggests a decline of 14.2% from the year-ago period’s reported figure. The consensus mark for revenues is $3,373 million, indicating a drop of 2.8% from the figure reported in the year-ago quarter.

Factors at Play

Kellogg’s third-quarter performance is likely to reflect gains from an investment in Nigerian food distributor, Multipro, which has been one of the key top-line drivers for more than a year now. Also, the company’s top line is likely to have continued benefiting from the renowned nutrition bar brand, RXBAR. Further, continued contribution from the acquisition of Pringles is expected for the Asia, Middle East and Africa (AMEA) region.

Apart from this, Kellogg focuses on undertaking efforts to restructure the portfolio. The company recently concluded the sale of its cookies, fruit snacks, pie crust and ice cream cones businesses. However, management on its second-quarter conference call stated that this divestiture is likely to hurt Kellogg’s net sales by 4-5% in the third quarter. This, in turn, is likely to reflect on the company’s operating profit in the to-be-reported quarter.

Moreover, cost inflation is likely to have affected Kellogg’s bottom line in the third quarter. Additionally, volatile currency movement is a concern.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Kellogg this season. The combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kellogg carries a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Church & Dwight DG has an Earnings ESP of +0.93% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

TreeHouse Foods THS has an Earnings ESP of +1.01% and a Zacks Rank #2.

Hain Celestial HAIN has an Earnings ESP of +11.11% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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