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WK Kellogg Co

KLG: XNYS (USA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
$98.00ZrtxVqgvqsnp

Despite WK Kellogg's Prudent Efforts to Lift Profits, We Fail to See a Durable Competitive Edge

Business Strategy and Outlook

Even with the intended benefits enhanced focus should unlock, we fail to see an enduring competitive advantage in WK Kellogg as a stand-alone business. For one, we surmise its leading market share position in the North American cereal aisle is diluted as its entire portfolio sits in a shrinking category. In our view, this dents its relationships with retailers that strive to stock shelves with key traffic drivers. Further, without ties to the faster-growing snacks arm (which now sits inside narrow-moat Kellanova), WK Kellogg is left with subpar scale (generating less than $3 billion in sales annually), which likely weakens its bargaining power when sourcing key ingredients, negotiating slotting fees, and securing advertising placements.

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