Kellogg Stock Has Underperformed The Market Since 2018- Here’s Why

K: Kellogg logo
K
Kellogg

Kellogg (NYSE: K) stock price gained 32% from $57 at 2018 end to around $75 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company witnessed a small rise in its revenue per share, driven by a rise in sales and a drop in its outstanding share count. However, despite the stock’s gains, Kellogg has largely underperformed the S&P, which returned almost 65% over the same period.

In our interactive dashboard, Why Kellogg Stock Moved: K Stock Has Gained 32% Since 2018, we break down the factors behind this move.

(A) Kellogg’s Total Revenue has risen 5.3% from $13.5 billion in FY 2018 to $14.3 billion currently

  • Kellogg’s total revenue has risen steadily from $13.5 billion in FY ’18 to $14.2 billion in FY ’21, and currently stands at $14.3 billion on an LTM basis.
  • In FY ’21, around 58% of Kellogg’s sales came from the North America region, bringing in $8.17 billion for the company.
  • However, sales from North America have in fact dropped $200 million over the last two years, and Europe and AMEA (Africa Middle East Asia) have seen sales grow at a faster rate, adding a combined $750 million since FY 2019.
  • For details about Kellogg revenues and comparison to peers, see Kellogg (K) Revenue Comparison
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(B) Revenue per share (RPS) increased 8% from $38.81 in FY 2018 to $41.93 currently

  • Kellogg revenue rose from $13.5 billion in 2018 to $14.3 billion currently, while the outstanding share count dropped from 349.1 million in 2018 to 340.3 million currently.
  • Due to this, RPS has risen steadily from $38.81 in FY ’18 to $41.93 currently.

(C) Price-To-Sales (P/S) multiple for Kellogg rose from 1.4x in 2018 to 1.7x by 2019 end, but then pulled back to 1.5x in 2020 and 2021, before rising to 1.8x currently

  • Kellogg’s P/S multiple rose to around 1.7x by late 2019, on the back of rising investor expectations surrounding continued demand growth for its products across all regions, leading to a rise in the company’s sales.
  • However, due to the increased economic uncertainty weighing on the broader markets and the gradual drop in North America sales, the P/S multiple had pulled back to 1.5x by 2021 end, before rising to as high as 1.8x currently.
  • For additional details about the company’s sales and comparison to peers, see Kellogg (K) Revenue Comparison.

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 Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 K Return 2% 17% 2%
 S&P 500 Return 0% -14% 84%
 Trefis Multi-Strategy Portfolio 1% -13% 245%

[1] Month-to-date and year-to-date as of 8/9/2022
[2] Cumulative total returns since the end of 2016

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