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Shares of Kellogg  (K) rose after the company reported flat sales for Q3 2013 and cut its full-year sales forecast. Yes, you read that correctly. Because while the packaged goods giant did have some bad news to get out of the way this morning, Kellogg also revealed a four-year cost cutting plan that has Wall Street buzzing. But is this the turning point for Kellogg that everyone is chalking it up to be?

Let’s take a look:

Company Profile

Kellogg  is best known for its line of cold breakfast cereals, which include popular names like Apple Jacks, Corn Pops, Frosted Flakes and Raisin Bran. Kellogg employs over 31,000 worldwide across 18 countries, and its products are marketed in more than 180 countries.

In the past decade, the company has been expanding past the cereal business through a series of high-profile acquisitions. In 2001, Kellogg acquired cookie and cracker manufacturer Keebler Company for $3.86 billion. Since then, the company has also acquired Famous Amos, Cheez-It as well as Kashi and Morningstar Farms. And, with its most recent acquisition of Pringles, Kellogg is now the second largest snack food company, second only to PepsiCo (PEP).

Earnings Rundown

Just this morning Kellogg reported third-quarter results that topped analyst sales and earnings estimates. Compared with the year ago period, net income inched up 3% to $326 million, or 90 cents per share. Excluding integration costs and other one-time items, adjusted earnings were 95 cents per share. Analysts predicted 89 cents per share so Kellogg posted a 7% earnings surprise.

Meanwhile, net sales remained at $3.72 billion, same as Q3 2012. This beat the $3.71 billion consensus sales estimate. In the U.S., Kellogg reported lower sales in its Morning Foods and Snacks segments while its Specialty segment posted 6.2% annual sales growth. Meanwhile, the company reported 3.4% net sales growth in latest America and 6.4% growth in Europe.

Looking Ahead

Kellogg lowered its 2013 sales outlook to a range of 4% to 5%, down from its previous forecast of 5% annual sales growth. Meanwhile, the company forecasts adjusted earnings at the low end of its previous estimate of $3.75 to $3.84 per share.

However, K shares rose today because the company also revealed “Project K,” a cost cutting plan that aims to trim Kellogg’s global workforce by 7%, or 2,170, by 2017. By consolidating under-performing plans and eliminating excess capacity, Project K should result in annual cash savings between $425 billion and $475 million in 2018. The program is also expected to yield a 30% after-tax rate of return. Project K is part of a larger plan to move away from the struggling cereal business in North America and expand into the increasingly popular salty snacks business.

Current Ratings

Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. Over the past twelve months, this Conservative stock has remained squarely in buy territory. That’s thanks to the stock’s B-rated Quantitative Grade, which indicates that K is supported by strong institutional buying pressure. That being said, K receives a C for its Fundamental Grade. Kellogg has had a longstanding record of lackluster operating margin growth (D-rated) and it could stand to firm up its cash flow, sales growth and earnings growth (all Cs).

Meanwhile, Kellogg receives top marks in terms of return on equity (A-rated) and earnings momentum (B-rated). My hope is that once the latest earnings data is plugged into Portfolio Grader, the stock’s Fundamental Grade will improve.

Bottom Line

As of this posting, November 4, I consider K a B-rated Buy.