Kellanova Hungers for Profitable Growth, After Losing Its Appetite for U.S. Cereal

After untangling its operations, Kellanova's strategic playbook now centers almost exclusively on its global snacking portfolio. But we don't think it will abandon its focus on increasing investments in its capabilities and brands while extracting inefficiencies. In this context, we think it will continue to judiciously tailor its mix to expand pack size options to extend its distribution. However, management's motivation for the split lacks substance, in our view; we still see the primary driver as unlocking a higher multiple for the faster-growing snack business now that it's unencumbered from the mature North American cereal brands.