Linked here’s a detailed quantitative evaluation of Kellanova (Okay). Beneath are some highlights from the above linked evaluation:
Firm Description: Kellanova (previously the Kellogg Firm) is an American multinational meals manufacturing firm. It produces cereal and comfort meals and markets them by a number of well-known manufacturers together with the Kellogg’s model.
Fair Value: In calculating truthful worth, I think about the NPV MMA Differential Truthful Worth together with these 4 calculations of truthful worth, see web page 2 of the linked PDF for an in depth description:
1. Avg. Excessive Yield Value
2. 20-Yr DCF Value
3. Avg. P/E Value
4. Graham Quantity
Okay is buying and selling at a premium to all 4 valuations above. Since Okay’s tangible e-book worth will not be significant, a Graham quantity cannot be calculated. When additionally contemplating the NPV MMA Differential, the inventory is buying and selling at a 167.9% premium to its calculated truthful worth of $20.71. Okay didn’t earn any Stars on this part.
Dividend Analytical Data: On this part there are three attainable Stars and three key metrics, see web page 2 of the linked PDF for an in depth description:
1. Free Money Stream Payout
2. Debt To Whole Capital
3. Key Metrics
4. Dividend Progress Fee
5. Years of Div. Progress
6. Rolling 4-yr Div. > 15%
Okay earned no Stars on this part. The corporate has paid a money dividend to shareholders yearly since 1923 and has elevated its dividend funds for 0 consecutive years.
Dividend Income vs. MMA: Why would you assume the fairness danger and put money into a dividend inventory in the event you may earn a greater return in a a lot much less dangerous cash market account (MMA) or Treasury bond? This part compares the incomes capacity of this inventory with a high yield MMA. Two gadgets are thought-about on this part, see web page 2 of the linked PDF for an in depth description:
1. NPV MMA Diff.
2. Years to > MMA
The NPV MMA Diff. of the $96 is beneath the $3,500 goal I search for in a inventory that has elevated dividends so long as Okay has. The inventory’s present yield of 4.11% exceeds the three.75% estimated 20-year common MMA fee.
Friends: The corporate’s peer group consists of: Campbell Soup Firm (CPB) with a 3.5% yield, Normal Mills, Inc. (GIS) with a 3.6% yield, and The Hershey Firm (HSY) with a 2.9% yield.
Conclusion: Okay didn’t earn any Stars within the Truthful Worth part, didn’t earn any Stars within the Dividend Analytical Information part and didn’t earn any Stars within the Dividend Earnings vs. MMA part for a complete of zero Star. This quantitatively ranks Okay as a 0-Star Keep away from inventory.
Utilizing my D4L-PreScreen.xls mannequin, I decided the share worth would wish to lower to $12.24 earlier than Okay’s NPV MMA Differential elevated to the $3,500 minimal that I search for in a inventory with 0 years of consecutive dividend will increase. At that worth the inventory would yield 16.0%.
Resetting the D4L-PreScreen.xls mannequin and fixing for the dividend development fee wanted to generate the goal $1,700 NPV MMA Differential, the calculated fee is 9.8%. This dividend development fee is larger than the -4.6% used on this evaluation, thus offering no margin of security. Okay has a risk rating of two.25 which classifies it as a Excessive danger inventory.
Traditionally, Okay loved comparatively steady finish markets. Its advertising and marketing efforts and product innovation have bolstered gross sales and decreased danger. At 81%, Okay’s free money movement payout is up from the 65% in my earlier report, and remains to be above my most of 60%. Its debt to complete capital at 66% (up from 61% within the earlier report) is properly in extra of my 45% most. The inventory is buying and selling considerably above my calculated truthful worth of $20.71, so for now, I’ll wait on a extra opportune time to provoke a place in Okay.
Disclaimer: Materials introduced right here is for informational functions solely. The above quantitative inventory evaluation, together with the Star ranking, is mechanically calculated and relies on historic info. The evaluation assumes the inventory will carry out sooner or later because it has prior to now. That is usually by no means true. Earlier than shopping for or promoting any inventory you ought to do your individual analysis and attain your individual conclusion. See my Disclaimer for extra info.
Full Disclosure: On the time of this writing, I held no place in Okay (0.0% of my Dividend Progress Portfolio).
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Tags: Okay, GIS, CPB, HSY,
