Q2 Earnings Outperformers: Kellanova (NYSE:K) And The Rest Of The Shelf-Stable Food Stocks

Let’s dig into the relative performance of Kellanova (NYSE:K) and its peers as we unravel the now-completed Q2 shelf-stable food earnings season.

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 21 shelf-stable food stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 0.7% below.

After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.

Thankfully, shelf-stable food stocks have been resilient with share prices up 6.9% on average 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 $3.19 billion, down 4.7% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue growth estimates and a decent beat of analysts’ earnings estimates.

Interestingly, the stock is up 37.6% since reporting and currently trades at $80.01.

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

Best Q2: BellRing Brands (NYSE:BRBR)

Spun out of Post Holdings in 2019, Bellring Brands (NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.

BellRing Brands reported revenues of $515.4 million, up 15.6% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with an impressive beat of analysts’ gross margin and organic revenue growth estimates.

The market seems happy with the results as the stock is up 23.4% since reporting. It currently trades at $60.94.

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

Weakest Q2: Lamb Weston (NYSE:LW)

Best known for its Grown in Idaho brand, Lamb Weston (NYSE:LW) produces and distributes potato products such as frozen french fries and mashed potatoes.

Lamb Weston reported revenues of $1.61 billion, down 4.9% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted underwhelming earnings guidance for the full year and a miss of analysts’ organic revenue growth estimates.

Lamb Weston delivered the weakest full-year guidance update in the group. As expected, the stock is down 16.1% since the results and currently trades at $65.92.

Read our full analysis of Lamb Weston’s results here.

McCormick (NYSE:MKC)

The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.

McCormick reported revenues of $1.64 billion, flat year on year. This result was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged a decent beat of analysts’ organic revenue growth and earnings estimates.

The stock is up 23.8% since reporting and currently trades at $83.76.

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

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 natural and organic products.

SunOpta reported revenues of $171 million, up 21.1% year on year. This result beat analysts’ expectations by 6.9%. It was a very strong quarter as it also recorded an impressive beat of analysts’ earnings estimates and full-year revenue guidance exceeding analysts’ expectations.

SunOpta achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 28% since reporting and currently trades at $6.77.

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

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