The stock's dividend yields 3% at a share price of $61.30 a share. This represents a sustainable payout ratio of 36% and leaves room for dividend increases in the year ahead.
As the one-year chart below illustrates the stock rebounded from an early 2014 swoon and is nearly 2% higher than where it started the year.
K data by YCharts
Along with TheStreet Quant Ratings I rate Kellogg's as a buy. From the chart above you'll see two reasons. It's trailing 12-month (TTM) Return on Equity (ROE) of 64% significantly exceeds both the industry average and the S&P 500. Its TTM operating margin of nearly 20% is also exceptional.
Another impressive number is the company's net income which grew by 2,656.3% from the year-ago quarter rising from -$32 million to $818 million. In fact, according to TheStreet it exceeded that of the S&P 500.
Along with the improvements in net income, the net profit margin of 23.36% is significantly better than the industry average.
No company is perfect, and Kellogg's net operating cash flow increased by only 9.13% to $418.00 million from the year-ago quarter. This is much lower than the industry average growth rate of 53.43%. Plus, according to Yahoo! Finance, Kellogg's most recent quarterly long-term debt was a daunting $7.36 billion.
My firm conclusion is that the many strengths of Kellogg's, like its ability to generate exceptional earnings and its outstanding ROE outweigh its generally high debt management risk.
With its extensive lineup of famous brands, outstanding net income and it's stellar reputation for ethics and integrity, Kellogg's is a comfortable fit for socially responsible and proactive investors.
At the time of publication the author had no positions in K or GIS.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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