But this positive track record looks poised to hit a roadblock. The 110-year-old company faces challenges such as slowing growth and a lofty valuation.
Let's delve a little deeper into why Kellogg's is among a group of vulnerable stocks.
There is no doubting the brand recognition of Kellogg's and its diverse portfolio of food products including cereal, cereal bars, crackers, fruit-flavored snacks, frozen waffles and toaster pastries. The company's list of venerable brands includes Eggo, Frosted Mini-Wheats, Pop-Tarts and Rice Krispies.
However, looking at the company as an investment option is a different story. Some think growth is petering out at Kellogg's.
Although revenue rose to about $13.5 billion last year from $13.1 at the end of 2011, net income declined by about half to $614 billion from $1.23 billion.
In fact, analysts don't see the company's revenue improving meaningfully this year or in 2017.
The company's operating margins are down from the mid-teens to about 8%.
The U.S. dollar looks likely to continue strengthening, affecting sales for the company.
In addition, the decline in consumption of ready-to-eat cereals is a definite reality. The category has already experienced years of a gradual volume slump in developed markets including Asia and North America.
One positive is that the company is reviving free cash flow (more than $1 billion a year). But the flat revenue and drop in profits look like they will catch up with Kellogg's.
Meanwhile, the company's shares look pricey. At a price-earnings/growth ratio, Kellogg's is steeply priced at 4.38, compared with the industry's PEG ratio of 2.64.
After rising by 13.58% over the past 12 months, the company's shares offer little upside. The 12-month median price target culled from 17 analysts tracking the stock is $77, less than a 5% increase from its current price.
There is little merit in buying the company's shares at present. With debt levels rising (already near $8 billion), income stagnant and profits dropping, its business fundamentals are set to deteriorate.
This would obviously affect the company's lofty valuations and ultimately bring down its share value.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.