Yahoo Finance Will Kellogg’s Declining Earnings Growth Continue in 1Q16?
What Can Investors Expect from Kellogg's 1Q16 Results?
Fiscal 1Q16 EPS is expected to fall
In this part, we’ll look at analysts’ EPS (earnings per share) estimates for fiscal 2016 for Kellogg Company (K). Analysts expect Kellogg’s adjusted EPS to be $0.94—compared to 1Q15 EPS of $0.98. It represents a decline of 5%. In the following chart, you can see that the company surpassed the estimates in all of the quarters in 2015. The currency translation is estimated to cause a decline in its 1Q16 EPS.
Analysts’ expectations for 2016
Analysts expect the company’s earnings to fall in 1Q16. However, the expectations also state that the earnings will bounce back in 2H16. The EPS is expected to grow by 1%, 9%, and 14% for 2Q16, 3Q16, and 4Q16, respectively. The fiscal earnings growth will be positive.
Management’s EPS guidance
During its 4Q15 earnings announcement, Kellogg reaffirmed the previous guidance for currency-neutral adjusted EPS in fiscal 2016. The company expects 6%–8% growth in currency-neutral adjusted EPS. It expects a currency translation impact of $0.10 per share. This includes ~$0.04 for the translation of Venezuelan results impacting 1H16.
Earnings estimate for peers
Kellogg’s peers in the food and packaging industry include General Mills (GIS), Mondelez International (MDLZ), and Lancaster Colony (LANC).
General Mills’ EPS for its fiscal 4Q16 is expected to fall by 20%.
Mondelez’s EPS for its fiscal 2Q16 is projected to fall by 14%.
Lancaster’s EPS for its fiscal 3Q16 is projected to grow by 10%.
To gain exposure to Kellogg, you can invest in ETFs like the Consumer Staples Select Sector SPDR Fund (XLP) and the Market Vectors Agribusiness ETF (PSL). They invest 3.4% of their portfolios in Kellogg.
Browse this series on Market Realist:
