WK Kellogg Co (NYSE: $KLG) is a prominent food company that operates in the United States, Canada, and the Caribbean. With a rich history of innovation and operational excellence, the company boasts a portfolio of well-regarded and beloved brands, including Kelloggs, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi, and Bear Naked, all of which have been delighting consumers for over a century.
Recently, WK Kellogg (NYSE: K) Co, which has been separated from Kellanova (NYSE: K), commenced independent trading on the NYSE.
This spin-off was part of a corporate restructuring plan approved by the board in September. Shareholders of Kellanova received one share of WK Kellogg for every four Kellanova shares they held. However, WK Kellogg shares faced a 7.19% decline, trading at $12.39 on Tuesday.
The company, headquartered in Battle Creek, Michigan, is recognized for its Corn Flakes brand and iconic figures such as Tony the Tiger.
Operating in the food sector across the United States, Canada, and the Caribbean, it maintains a workforce of approximately 3,000 employees and boasts a post-split valuation of about $1.5 billion.
According to real-time data from InvestingPro, WK Kellogg currently holds an adjusted market capitalization of $18.15 billion, a P/E Ratio of 20.86, and annual revenue of $15.87 billion.
While WK Kellogg saw a decline in sales from $2.8 billion during the pandemic to $2.4 billion in 2021, it has embarked on a half-billion-dollar investment program aimed at achieving flat sales of $2.7 billion and an EBITDA of $260 million by fiscal year 2024.
The company operates with a net cash position of $465 million. InvestingPro data indicates a revenue growth of 8.88% and a gross profit of $4.861 billion for WK Kellogg.
Despite the initial market response, CEO Gary Pilnick maintains an optimistic outlook regarding the company’s ability to meet its strategic goals as an independent entity.
InvestingPro suggests that WK Kellogg is in an oversold position, potentially indicating a rebound. The company has a history of consistent dividend payments, having raised its dividend for 18 consecutive years.
In contrast, Kellanova reports pro forma sales of $13 billion and an EBITDA of approximately $2 billion. Post-spin-off, the company operates with 342 million shares outstanding, with earnings per share estimated at around $3.35.
The market’s perception of the split has had a negative impact on share prices. For more valuable insights, consider subscribing to InvestingPro, which offers additional tips and real-time metrics.
What You Should Know About The Kellogg Split
Kellogg has formally divided into two separate, publicly traded entities, and on their inaugural trading day post-separation, shares of both companies experienced a decline.
Kellanova (K), retaining the original Kellogg trading symbol “K,” is responsible for the global snacking, international cereal, noodles, and North American frozen food products, which include brands like Pringles and Pop-Tarts. Meanwhile, WK Kellogg (KLG) houses the traditional Kellogg cereal brands like Corn Flakes and Froot Loops, trading under the symbol “KLG.”
The division was accomplished by Kellanova through the distribution of all WK Kellogg shares to Kellanova investors as of 12:01 a.m. ET on October 2. Shareholders of Kellanova received one share of WK Kellogg stock for every four shares of Kellanova they held as of September 21.
Kellanova’s CEO, Steve Cahillane, expressed that with this separation, Kellanova has entered a new phase with a fresh identity and renewed aspirations. He had previously argued that the split, approved by the board last month, would result in two stronger companies and generate substantial value for shareholders.
WK Kellogg, now operating as an independent entity, is fully committed to achieving success in the cereal sector. Its CEO is Gary Pilnick, the former vice chair of corporate development and chief legal officer at Kellogg.
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