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TheStreet Open House

Will This JP Morgan (JPM) Upgrade Help Kellogg (K) Today?

NEW YORK (TheStreet) -- JP Morgan  (JPM) upgraded Kellogg  (K) to "neutral" from "underweight" as the firm believes the short thesis has largely played out.

The stock was rising 0.41% to $57.97 shortly after the market opened on Friday.

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Separately, TheStreet Ratings team rates KELLOGG CO as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KELLOGG CO (K) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has exceeded that of the Food Products industry average, but is less than that of the S&P 500. The net income increased by 2.5% when compared to the same quarter one year prior, going from $318.00 million to $326.00 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 42.50% is the gross profit margin for KELLOGG CO which we consider to be strong. Regardless of K's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.76% trails the industry average.
  • KELLOGG CO's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KELLOGG CO reported lower earnings of $2.68 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($3.76 versus $2.68).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, KELLOGG CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: K Ratings Report

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