Kellogg - Final Thoughts

Ticker Symbol: K

Final Thoughts on Kellogg

A lag in consumer spending has created challenges for Kellogg. Customers are spending significantly less today than they were a year ago and this will make it difficult for Kellogg to continue to grow profits and increase. However, the low-cost nature of many of their products does give them an advantage in this market, especially considering the current high unemployment rates. The company has, in fact, been seeing internal sales growth including an especially strong showing from its cereal lines. If Kellogg can maintain their margins and sales levels, they have the potential of being less affected be the tough economic times than many others in the consumer goods industry.

Kellogg's large international presence could present problems in the short-term. The firm is vulnerable to currency fluctuations and given the current state of the market, these fluctuations have been rather unpredictable. In their most recent earnings report, Kellogg chose to remove the effect of currency changes from their accounts. However, if the dollar continues to improve against the Euro, Mexican Peso, and other currencies, Kellogg may be forced to recognize a large fall from the strong growth position it reported in the first quarter of 2009. This could potentially hurt the company's value.

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