WK Kellogg Earnings: Shares Pop on Swelling Profitability, and We Remain Ready Buyers

Investors cheered no-moat WK Kellogg’s fiscal 2023 fourth-quarter results (shares jumped nearly 10%) as it eked out solid margin gains—standalone adjusted gross and EBITDA margins inflated 300 and 270 basis points to 29.2% and 8.2%, respectively. In our view, these results illustrate the firm’s stringent focus on extracting inefficiencies. Given this focus, we see a viable path to midteens EBITDA margins by fiscal 2026 as it further modernizes its supply chain and optimizes its network.