Shelf-Stable Food Stocks Q3 Teardown: Kellanova (NYSE:K) Vs The Rest

December 23, 2024 at 04:03 AM EST

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As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the shelf-stable food industry, including Kellanova (NYSE: K) and its peers.

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

The 20 shelf-stable food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 5.7% below.

While some shelf-stable food stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4% since the latest earnings results.

Kellanova (NYSE: K)

With Corn Flakes as its first and most iconic product, Kellanova (NYSE: K) is a packaged foods company that is dominant in the cereal and snack categories.

Kellanova reported revenues of $3.23 billion, flat year on year. This print exceeded analysts’ expectations by 2.5%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ organic revenue estimates but a miss of analysts’ EBITDA estimates.

Kellanova achieved the biggest analyst estimates beat of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $80.50.

Is now the time to buy Kellanova? Access our full analysis of the earnings results here, it’s free.

Best Q3: General Mills (NYSE: GIS)

Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE: GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.

General Mills reported revenues of $5.24 billion, up 2% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.1% since reporting. It currently trades at $63.89.

Is now the time to buy General Mills? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: J&J Snack Foods (NASDAQ: JJSF)

Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ: JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.

J&J Snack Foods reported revenues of $426.8 million, down 3.9% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and gross margin estimates.

As expected, the stock is down 7.6% since the results and currently trades at $160.13.

Read our full analysis of J&J Snack Foods’s results here.

SunOpta (NASDAQ: STKL)

Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.

SunOpta reported revenues of $176.2 million, up 15.5% year on year. This print beat analysts’ expectations by 1.8%. More broadly, it was a mixed quarter as it also produced full-year revenue guidance meeting analysts’ expectations but a significant miss of analysts’ gross margin estimates.

The stock is up 13.6% since reporting and currently trades at $7.71.

Read our full, actionable report on SunOpta here, it’s free.

Mondelez (NASDAQ: MDLZ)

Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.

Mondelez reported revenues of $9.20 billion, up 4% year on year. This number surpassed analysts’ expectations by 0.9%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.

The stock is down 13.1% since reporting and currently trades at $60.11.

Read our full, actionable report on Mondelez here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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