Kellanova's Q3 Earnings Top Estimates, Organic Sales Edge Lower

Kellanova (K) reported third-quarter 2025 results, wherein the top and bottom lines increased year over year and came ahead of their respective Zacks Consensus Estimate.Results underscored disciplined execution in a tough demand environment. While organic sales softness continues across developed markets, the company’s operational efficiency, robust emerging market momentum and cost management supported another quarter of earnings growth. With its acquisition by Mars approaching, Kellanova remains positioned to maintain steady performance through the transition.K: Quarterly HighlightsKellanova posted adjusted earnings of 94 cents per share, up 3.3% from the year-ago quarter and ahead of the Zacks Consensus Estimate of 88 cents. On a currency-neutral basis, adjusted EPS increased 2.2% to 93 cents.Kellanova Price, Consensus and EPS Surprise Kellanova price-consensus-eps-surprise-chart | Kellanova QuoteNet sales rose 0.9% year over year to $3.26 billion, supported by growth momentum in noodles across Africa and favorable currency movements. The top line surpassed the Zacks Consensus Estimate of $3.25 billion. However, organic net sales declined 0.5%, as category softness in snacks, cereal and frozen foods weighed on overall performance.The adjusted gross margin stood at 33.4% compared with 35% in the prior year. The adjusted operating profit improved 7.3% to $473 million, while currency-neutral adjusted operating profit rose 6.6% to $470 million, driven by productivity, expense control and lower incentive compensation, partly offset by an unfavorable business mix and elevated costs.K’s Segment-Wise PerformanceNorth America: Sales fell 2.7% year over year to $1.63 billion, as volumes remained soft in the snacking and frozen categories. Organic sales declined 2.6%. On an adjusted and currency-neutral basis, operating profit rose 10%.Europe: Sales decreased 0.9% to $653 million, hurt by reduced volumes and price/mix stemming from weak snack and cereal category demand and order disruptions from specific customers. Organic sales slipped 5%. The adjusted operating profit declined 22%, or 25% on a currency-neutral basis.Latin America: Sales of $308 million declined 0.8% year over year (down 2.3% organically), mainly reflecting weaker cereal volumes in Mexico, partly made up by favorable currency movements and price realization. The adjusted operating profit decreased 37%, or 38% on a currency-neutral basis.Asia Pacific, Middle East & Africa (“AMEA”): AMEA remained the standout region, with sales up 13.7% to $672 million, fueled by strong volume gains and the carryover impact of last year’s currency-driven price increases in the Africa noodles business, complemented by broad-based growth in cereal volumes and sales across the region. Organic sales increased 11.5%. On an adjusted and currency-neutral basis, operating profit rose 4%, underscoring the region’s role as a key growth engine for Kellanova.Other Updates for KellanovaThe Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $240 million, long-term debt of $4.34 billion and total equity of close to $4.3 billion.For the first nine months of 2025, Kellanova’s net cash from operating activities totaled $788 million. Capital expenditures amounted to $468 million, resulting in free cash flow of $320 million.As previously announced, Mars, Incorporated agreed to acquire Kellanova for $83.50 per share in cash. The transaction, approved by shareholders in November 2024, remains subject to regulatory approvals and is expected to close by late 2025. Due to the pending merger, Kellanova is not issuing forward guidance at this time.Shares of K have gained 4% in the past three months against the industry’s decline of 19.8%.Some Solid Food BetsUnited Natural Foods (UNFI) engages in the distribution of natural, organic, specialty, produce and conventional grocery and non-food products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.5% and 167.6%, respectively, from the prior-year reported levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.Lamb Weston (LW), which engages in the production, distribution and marketing of frozen potato products, currently sports a Zacks Rank of 1.The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales indicates growth of 1.3% from the prior-year reported levels. LW delivered a trailing four-quarter earnings surprise of 16%, on average.Vital Farms (VITL) packages, markets and distributes shell eggs, butter and other products. It carries a Zacks Rank #2 (Buy) at present. VITL delivered a trailing four-quarter earnings surprise of 35.8%, on average.The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies an increase of 27.2% and 16.1%, respectively, from the prior-year reported levels.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kellanova (K): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis Report Vital Farms, Inc. (VITL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks