Is March a good month for buying Kellogg Company shares?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Mar 4, 2021
  • Kellogg Company raised its guidance for FY21
  • Bank of America assigned a buy rating on Kellogg Company with a $76 price objective
  • Kellogg Company has signed a long-term agreement with Enel Green Power

Kellogg Company (NYSE: K)shares have weakened more than 7% since the beginning of the year, and the current share price stands around $57. Wall Street remains bullish on Kellogg, and the stock price could stabilize above the $60 resistance if the U.S. stock market continues to trade in a bull market.

Fundamental analysis: Kellogg Company raised its guidance for FY21

Kellogg Company is an American multinational food manufacturing company that produces cereal and convenience foods. Kellogg Company reported Q4 results in February; total revenue has increased by 7.5% Y/Y to $3.46B while Q4 GAAP EPS was $0.59 (misses by $0.26).

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“We enter 2021 with solid momentum, and I remain confident that Kellogg will emerge from this pandemic a stronger Company. We’ve enhanced capabilities, reached incremental households, invested in our supply chain, and improved our financial flexibility. We are on a sound footing for continued balanced financial delivery,” said CEO

The company declared a $0.57/share quarterly dividend while the board of directors announced plans to increase the quarterly dividend to $0.58. Kellogg Company reported that it expects a further increase in revenues for the 2021 fiscal year while the EPS should be around $4.04 vs. $3.97 consensus.

Bank of America assigned a buy rating on Kellogg Company with a $76 price objective which is based on the EPS estimate and improvements in international markets.

“We believe a premium is warranted as we expect improvement in international and away from home markets, and share gains in retail will work to offset tough comps. We also believe Kellogg will benefit from a weaker USD,” Bank of America reported.

Kellogg Company reported yesterday that it had signed a long-term agreement with Enel Green Power for ~360GWh of wind electricity annually. According to the wind energy agreement, Kellog will achieve over 50% renewable energy for its electricity needs.

The company’s business continues to perform well, and with a $19.6B market capitalization, this company is reasonably valued. According to estimates, Kellogg will continue to grow on positive consumer preferences that have evolved to lean towards healthy foods.

Technical analysis: Kellogg Company shares continue to trade below $60 resistance

Kellogg Company shares continue to trade below $60 resistance even though Bank of America assigned a buy rating with a $76 price target.

Data source: tradingview.com

The current support levels are $55 and $50, $60, $65, and $70, represent the important resistance levels. If the price jumps above $60 resistance, it would be a signal to trade shares, and the next target could be around $63 or even $65.

Rising above $65 supports the continuation of the bullish trend for Kellogg Company shares, but if the price falls below $50, it would be a strong “sell” signal.

Summary

Kellogg Company raised its guidance for FY21, and the board of directors announced plans to increase the quarterly dividend to $0.58. Bank of America assigned a buy rating on Kellogg Company with a $76 price objective which is based on the EPS estimate and improvements in international markets.

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