Deutsche Bank Expects A 'Challenging' Q3 For Kellogg

Kellogg Company (NYSE: K) is scheduled to report its third quarter results on October 30 before market open. On Friday, Eric Katzman of Deutsche Bank released a cautious earnings preview while maintaining a Hold rating and $63 price target.

"Kellogg faces challenging trends in key categories, particularly U.S. cereal, which raises concerns around near term prospects," Katzman wrote. "Project K reinvestment will take time, but we question when cereal recovers."

Katzman notes that Nielsen data suggests a weakness exists in snack bars and crackers. In addition to a weakness, the packaged food industry has been "challenged" due to a promotional activity that has only shown minimal volume benefit.

General Mills, Inc. (NYSE: GIS) reported a "weak" first quarter results in September. According to Katzman, the company highlighted weak U.S. retail volume, solidifying industry wide trends that Kellogg investors need to be aware of heading in to earnings.

The analyst expects Kellogg to earn $0.93 per share in the third quarter, topping the consensus estimate of $0.92 on $3.7 billion on sales. EBIT may dip 3 percent from a year ago to $527 million, according to the analyst.