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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Costco’s Prospects Are Bright Despite Retail’s Changes, but Kellogg Seems the Better Investment

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

We are raising our valuation of wide-moat Costco to $368 per share from $354, reflecting higher near-term targets in light of solid sales at other firms and the time value of money. Despite this, however, we do not suggest investors build a position at this time, as the shares’ trading price assumes a level of perfection and consistency we believe will prove difficult to achieve. Instead, investors looking for consumer exposure should look up the value chain, toward wide-moat Kellogg.

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Company Profile

Business Description

Founded in 1906, Kellogg is a leading global manufacturer and marketer of cereal, cookies, crackers, and other packaged foods. Its offerings are manufactured in 21 countries and marketed in more than 180 countries. Its product mix includes well-known brands such as Special K, Frosted Flakes, Froot Loops, Rice Krispies, Pop-Tarts, Eggo, Kashi, and Morningstar Farms. The firm added the Pringles brand to its mix in 2012. Sales outside its home turf account for around 40% of Kellogg's consolidated sales base.

Contact
One Kellogg Square
Battle Creek, MI, 49016-3599
T +1 269 961-2000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Jun 30, 2021
Fiscal Year End Jan 1, 2022
Stock Type High Yield
Employees 31,000

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