Please ensure Javascript is enabled for purposes of website accessibility

Why Kellogg Stock Lost 10% in December

By Demitri Kalogeropoulos - Updated Apr 11, 2019 at 10:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Spiking market volatility added to investors' downbeat assessment of the snack giant's growth prospects.

What happened

Shares of cereal and snack giant Kellogg (K 2.02%) trailed the market last month, losing 10% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop ensured that shareholders lost to the market over the year, as the stock shed 16% compared to a 6% drop in the S&P.

Two children at a kitchen island eating cereal

Image source: Getty Images.

So what

Kellogg had a busy month, with new product introductions in key franchises like Cheez-It, Pringles, and Rice Krispies. However, investors were more focused on the company's strategic pivot, and whether the shift will produce better growth results. Kellogg announced in mid-November that it is looking to sell its cookies and fruit snacks businesses as part of a portfolio reboot.

Management is hoping these changes will help the company return to growth, especially in the U.S., where organic sales are down in both the snack and breakfast segments over the past nine months.

Now what

Kellogg is expecting to post a slight fourth-quarter revenue boost when it announces results on Feb. 7. Consistent with the prior quarter's trends, that increase should come with reduced profitability as the company struggles to pass along higher costs. Executives say they're optimistic about Kellogg's longer-term growth prospects, and they're making smart moves to focus the portfolio on the most attractive snack and cereal niches. Yet the stock isn't likely to break out of its current funk until the company can show consistent organic sales gains.

Check out the latest Kellogg earnings call transcript.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Kellogg Company Stock Quote
Kellogg Company
$70.72 (2.02%) $1.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.