Should Traders Buy the Dip on Kellogg Stock After Q4 Earnings Miss?

K has fallen over 20% in less than 6 months

Feb 12, 2021 at 2:54 PM

Kellogg Company (NYSE:K) is an American food manufacturing company. The company produces cereal and snack foods, including crackers and pastries. Kellogg’s portfolio features some of the world’s most recognizable food brands. It is responsible for the marketing for products including Corn Flakes, Frosted Flakes, Pringles, Eggo, Cheez-It, Special K, Pop-Tarts, and more

On Thursday, Feb.11, Kellogg posted its fourth-quarter earnings results before the open. The company’s earnings per share (EPS) came in at $0.86, missing Wall Street's expectations by a margin of $0.03. Kellogg had previously outperformed earnings estimates for the other three quarters of 2020. For the first quarter of 2020, the firm beat analyst expectations by $0.04 and reported an EPS of $0.99. For the second quarter of 2020, Kellogg stock posted a big increase in earnings. The Q2 EPS came in at $1.24, beating estimates by a margin of $0.30. Kellogg reported a significant decrease in earnings for the third quarter of 2020. However, the company still beat earnings estimates by a margin of $0.04 with a report of $0.91 per share.

Kellogg has also announced a dividend of $0.57 per share, payable on March 15. The company will pay dividends to shareowners of record at the close of business on March 2. Its forward annual dividend rate currently stands at 2.28, equating to a dividend yield of 4%. Kellogg has paid a total of 385 dividends to stockowners since 1925. In addition, the company’s board of directors announced plans to increase the quarterly dividend to $0.58 per share beginning with the second quarter of 2021.

Kellogg stock has already declined 8.2% this year, and is down about 22% from its annual peak of $72.88 in August of 2020. K is currently up approximately 8% from its 52-week low of $52.66. Overall, Kellogg stock currently sits at a very attractive value. K trades at a price-earnings ratio of 17.08 at the moment and has forward price-earnings ratio of 14.71. Kellogg stock also offers a high dividend yield in exchange for very little risk. Finally, the company has a long history of generating consistent revenue growth to back a long-term approach.

K Feb 12

Follow @Schaeffers

You Don’t Need 25 Alerts -- You Need ONE You Can Trust!

That’s the idea behind Trade of the Week, Schaeffer’s newest trade alert.

Every Monday morning before the opening bell, you’ll receive a single, expertly researched trade recommendation -- built from the same proprietary research we’ve been using for over four decades.

It’s not just a signal.

It’s a plan designed for traders who are tired of jumping from alert to alert without ever finding their edge.

No juggling alerts. No switching directions mid-week. Just one clear, expertly researched trade idea -- delivered before the market even opens.

👉 JOIN RIGHT NOW FOR JUST $1 TO GET THE NEXT TRADE!