Quiet Kellogg's Stock Could Make Noise This Week

K has a history of muted post-earnings moves

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Kellogg Company (NYSE:K) will step into the earnings confessional on Thursday, Feb. 10 before the market opens. Ahead of the event, K looking to get back on track after finishing 2021 on a high note. 

Kellogg's stock is only down 4% in 2022, but suffered a 5.6% bear gap last week after BMO stepped to the sidelines with a downgrade, trimming its price target to $70 from $75 in the process. If there's reasons for optimism ahead of Kellogg's report, its the stock's 14-Day Relative Strength Index (RSI) of 20, firmly in oversold territory.

K has a history of muted post-earnings reactions though in the last two years. The stock has averaged a post-earnings move of 2.6%, regardless of direction, after the last eight corporate reports. This time around, the options market is pricing in a slightly larger-than-usual move of 5%. 

From a fundamental point of view, Kellogg stock has a decent valuation, with a forward price-earnings ratio of 15.36 and a price-sales ratio of 1.53. However, investors can, at best, expect minimal growth as the food production company has increased revenues just 5% and net income has dropped 6% since fiscal 2018. A projection of minimal growth is also backed by covering analysts estimates. Analysts current place Kellogg's earnings growth at 0.2% and K's revenue growth at 1.7% for the full year of fiscal 2022.

Nonetheless, the food production brand has a forward dividend of $2.32 with a solid dividend yield of 3.76%, making Kellogg stock a safe option for dividend-centric investors.

Another strategy could be premium-selling. K ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of 19 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in

 




 
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