Kellogg Company (K) Loud Thud Doesn’t Negate The Long-Term Story

Despite closing 0.86 points higher on 12 February, Kellogg Company (NYSE:K) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Wednesday. The shares accumulated 1.54 percent at $56.53 with a heavy trade volume of 3.692 million shares. After opening the session at $55.6, the shares went as high as $56.7001 and as low as $55.6, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $19.8 billion and now has 350.03 million shares outstanding. Kellogg Company (K) stock has lost -3.5 percent of market value in 21 trading days.

K stock has a trailing 3-year beta of 0.56, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $3.84 a share in the trailing twelve months. The stock’s value has fallen -0.84 percent year to date (YTD) against a decline of -16.04 percent in 12 month’s time. The company’s shares still trade -24.61 percent away from its 1-year high of $74.98 and 4.41 percent up from 52-week low of $54.14. The average consensus rating on the company is 2.8, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Kellogg Company (K) will probably climb 16.17 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $69 price as 12-month high target. This represents a whopping 22.06 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $59, which represents a return potential of 4.37 percent when compared to the closing price of the stock of $56.53 on Tuesday, February 12. The lowest price target for the stock is $52 — slightly more than -8.01 percent from K’s current share price.

History has shown that shares in Kellogg Company have gone up on 21 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. Investors will get their next glimpse of K’s Q1 earnings on May 02. Analysts are forecasting revenue to climb 3.6 percent to $3.32B in the fiscal first quarter, while earnings are seen soaring by nearly -8.33 percent to $0.88 per share. It earned $1.06 per share, in line with the $1.06, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $3.32B, in line with the $3.32B analysts expected. Earnings are estimated to increase by 85.5 percent this year, 4.35 percent next year and continue to increase by 2.86 percent annually for the next 5 years.

Let’s take a look at some insider activity at Kellogg Company (NYSE:K) and see the pattern. The earliest insider trade took place on 02/11/2019. Kellogg W K Foundation Trust parted with a total of 100 thousand shares of company at average share price of $54.76. The total for the sales was set at $5.48 million. After this transaction, the 10% Owner account balance stood at 64.83 million shares. The stock grew 3.23 percent since that insider sale. On 01/22/2019, Kellogg W K Foundation Trust, 10% Owner, sold 100 thousand shares at a price per share of $58.36. This removed 5.84 million shares from the insider’s fortune and the stock saw a -3.14 percent retreat in value since the news became public. This transaction left 64.93 million shares in the 10% Owner account.

On 01/10/2019, 10% Owner Kellogg W K Foundation Trust performed a sale transaction worth $5.82 million. This sale at $58.24 each has eliminated 100 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -2.94 percent decrease since the transaction was reported. The insider now is left with 65.03 million shares remaining in the account. Kellogg W K Foundation Trust, who performs the 10% Owner job, sold 100 thousand shares for $5.77 million. The disposal occurred on 12/20/2018 was priced at $57.69 per share. The share price plunged -2.01 percent since the reporting date. Kellogg W K Foundation Trust now left with a stake of 65.13 million K stock worth $3681.9 million after the insider selling.

The stock is currently hovering around the first support level of $55.85. Below this, the next support is placed in the zone of $55.18. Till the time, the K stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 39.5 on daily chart, which may remain a cause for comfort. If the price breaks below $55.18 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $56.95 mark may result into a pull-back move towards $57.38 level.

Shares of Kellogg Company (K) are trading at a P/E ratio of 14.52 times earnings reported for the past 12 months. The industry K operates in has an average P/E of 23.37. Its P/E ratio went as low as 14.91X and as high as 41.9 over the 5-year span.Further, it is sporting a 1.46 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.98. 34.7 percent is the gross profit margin for Kellogg Company and operating margin sits at 14.7 percent. Along with this, the net profit margin is 13 percent.