General Mills, Inc. (GIS) on Q2 2025 Results - Earnings Call Transcript
Jeff Siemon: Good morning. This is Jeff Siemon, Vice President of Investor Relations and Corporate Finance. Thank you for listening to General Mills’ prepared remarks for our Fiscal 2025 Second Quarter Earnings. Later this morning we will hold a separate, live question-and-answer session on today’s results, which you can hear via webcast on our investor relations website. Joining me for this morning’s presentation are Jeff Harmening, our Chairman and CEO, and Kofi Bruce, our CFO. Before I hand things over to them, let me first touch on a few housekeeping items. First, on our website, you will find our press release that posted this morning, along with a copy of the presentation and a transcript of these remarks. Please note that today’s remarks include forward-looking statements that are based on management’s current views and assumptions. The second slide in today’s presentation lists several factors that could cause our future results to be different than our current estimates. And with that, I will turn it over to Jeff. Jeff Harmening: Thank you, Jeff, and good morning, everyone. Entering fiscal 2025, our top priority was to accelerate our organic net sales growth, and specifically our volume growth, by delivering remarkable experiences to consumers across our leading food brands. As we look at the first half of the year, we made encouraging progress accelerating our volume growth and market share trends, including returning our North America Pet business to growth. General Mills’ first-half organic volume growth was 4 points better than our fiscal 2024 result, and we drove a significant increase in the proportion of our business growing share. Our pound share has improved most notably, with dollar share improving at a slower rate, as we expected, given our investments to increase value for consumers. These results are due to our continued focus on delivering Remarkable Experiences to consumers across the total product offering. We are investing to bring consumers superior products and benefits, at the right value, supported with remarkable brand building and omnichannel visibility. This work drove improved performance on many important businesses such as pet food, cereal, fruit snacks, and our Foodservice product lines. At the same time, we have more work to do in other places, with Refrigerated Dough offering the biggest opportunity for improvement, and challenging consumer trends in China continuing to present a headwind in that market. To achieve and build on our broad-based improvements in volume and share, we’ve stepped up our investment to bring greater value to consumers, which results in a lower outlook on operating profit and EPS in fiscal 2025. Amidst a dynamic and uncertain macroeconomic backdrop for consumers, we believe this is the right choice to further strengthen the remarkability of our offerings, which will better position General Mills for sustainable growth in fiscal 2026 and beyond. Our Q2 results are summarized on Slide 5. Organic net sales were up 1%, adjusted operating profit was up 7% in constant currency, and adjusted diluted EPS was up 12% in constant currency. These results were ahead of our expectations, especially on the bottom line, even as our outlook on the year has come down. The key reason for this unusual difference is that our Q2 results benefited from timing-related items that drove a 1.5 point benefit to net sales and a 6 point benefit to operating profit and EPS, all of which are expected to reverse in the second half. Kofi will provide more context on these items and our back-half expectations later in the presentation. Slide 6 outlines our three key priorities for fiscal 2025. As I mentioned up front, our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in a stronger volume and improved market share performance. Second, we will create fuel for investment by generating strong levels of HMM cost savings to offset inflation and reinvest back into our brands. And third, we will continue to drive strong cash generation while maintaining our disciplined approach to capital allocation. Slide 7 shows our pound and dollar share performance through the first half of fiscal 2025. We strengthened our competitiveness in Q2, with 56% of our priority businesses growing or holding pound share and 38% growing or holding dollar share, both of which were significant improvements from Q1 and fiscal 2024 levels. Importantly, all four segments drove improved pound and dollar share trends in Q2, and we saw our U.S. pet food business return to pound share growth and held dollar share for the first time in more than two years. We’ll look to build on this positive share momentum as we move through the second half of fiscal 2025. We’re seeing encouraging, broad-based improvement in our competitiveness across North America Retail as well. North America Retail’s pound and dollar trends strengthened in Q2 in seven of our top ten U.S. retail categories. Nearly 60% of our U.S. retail priority businesses grew or held pound share in Q2. And our results on dollar share moved up to 50% growing or holding share over the past month as we returned our U.S. cereal business to dollar share growth behind great consumer news, advertising, and merchandising execution, including successful campaigns with the Kelce Brothers and Chex Holiday Season. These share improvements have translated into strengthened retail sales growth across most of our U.S. portfolio from Q1 to Q2. Those gains have been largely offset, however, by a step back on refrigerated dough, which has had a disappointing start to the key baking season. As we move to the second half, we’ll build on our improving momentum on businesses like cereal, fruit snacks, Mexican food, and soup, and we’ll step up our plans and reinvest to improve our trends on refrigerated dough. Our plan for refrigerated dough this year included product renovation news, stronger marketing behind the Pillsbury Doughboy, and targeted investments in value. As we moved through the second quarter, it became clear that our product news and media support were not breaking through because we didn’t have the right value for consumers at the shelf. We’ve taken a number of actions recently to reverse the trends on refrigerated dough. We’ve already brought more value to consumers in December by adding investment to narrow price gaps across a broader range of items. We’re stepping up our taste renovation news in the second half across 30% of our portfolio, with new “more cinnamon” news on Pillsbury cinnamon rolls and continued support behind our “more flaky layers” news on biscuits. We’re launching new Cookie varieties, including Monster Cookie and Double Chocolate flavors as well as Grinch holiday shapes, to accelerate the strong growth we’ve been delivering since we unlocked new capacity earlier this year. And we’re significantly increasing our media support in the third quarter to ensure Pillsbury has greater visibility through the remainder of key baking season. The return of the Doughboy in our new campaign is working, and we expect media investment to be up more than 40% on our canned dough line in Q3. Stepping back, we’ve driven tremendous growth on Pillsbury refrigerated dough over the past five years. Getting this business back on track will be key to improving our North America Retail growth prospects. We’re confident that the actions we’re taking to increase remarkability will improve our momentum going forward. Turning to North America Pet, I’m proud of the continued progress we’ve made to restore this business to growth by focusing on Blue Buffalo’s ingredient superiority and executing our improvement plans across the portfolio. While we’re not all the way to where we want to be, we’ve continued to drive sequential improvement in our market share, with our pound share growing and dollar share flat in the U.S. in Q2. And we like the positive momentum we’re seeing across our key product lines. We drove high-single digit retail sales growth on our Life Protection Formula dry dog food business in Q2, leveraging compelling advertising focused on ingredient superiority. We’ve dramatically reduced the retail sales declines on our Wilderness dry dog food line by addressing a few key challenges. We launched new comparison advertising highlighting Wilderness’s higher protein content versus a key competitor, we introduced smaller bag sizes to provide lower absolute price points for pet parents, and we reintroduced grain-free varieties that are driving incremental household penetration gains. On wet food, we adjusted our price points on targeted offerings to get below key price cliffs, and we’re seeing positive returns. Our treats portfolio is where we have the most work still to do, but even here we’re seeing green shoots, with better shelf visibility and good merchandising execution driving improved turns at key customers. And we continued to strengthen our pet portfolio earlier this quarter with the announcement of our proposed acquisition of Whitebridge Pet Brands’ North American premium cat feeding and pet treating business, which includes the Tiki Pet and Cloud Star portfolio of brands. The jewel of this acquisition is the Tiki Cat brand, which has a strong presence in wet cat food, the fastest-growing segment within the U.S. pet food category and an area where Blue Buffalo is underdeveloped. Retail sales for Tiki Cat were up more than 20% over the past year, and with household penetration still below 2%, we see tremendous runway for future growth. We expect the transaction to close shortly, and we’re looking forward to welcoming the Whitebridge team to General Mills and working with them to expand our mission of loving and feeding more pets like family. In North America Foodservice, we continue to deliver strong market share growth across the segment, with more than 70% of our priority businesses growing or holding share in Q2. Our world-class R&D team is providing category-leading renovations in service of our operators, leveraging the Remarkable Experience Framework. In Q2, we launched a product renovation on our Baked Biscuit line, delivering improved product quality while also doubling the hold time, which helps operators better manage labor shortages and minimize product waste. We’re already seeing strong excitement and sell-in with key distributor partners on the back of this news. We also continued to drive strong share results in non-commercial channels, including continued share growth in K-12 schools. We’ve built on our leading position in cereal, thanks to our ongoing commitment to nutritional leadership, leveraging our two Equivalent Grain packaging innovation and our reduced sugar offerings. In International, we made progress stepping up our market share performance on our global platforms, while continuing to navigate challenging macro headwinds in China. We grew or maintained share on 45% of our priority businesses in Q2, driven by improving share performance in our distributor markets and Europe & Australia regions. This included strong performance on Häagen-Dazs, which delivered share growth in retail outlets in Q2, fueled by increased distribution on core flavors like Belgian Chocolate and Strawberry. Our China business continued to see double-digit traffic declines in our Häagen-Dazs shops in Q2, but we’re working to mitigate those headwinds by expanding distribution in retail, foodservice, and E-commerce channels. Our second enterprise priority for fiscal 2025 is to create fuel for reinvestment back into our business through industry-leading HMM cost savings. Even as we have added incremental investment to support stronger volume and share growth, the midpoint of our updated guidance ranges still translates into an adjusted operating profit margin profile in fiscal 2025 that is higher than our pre-pandemic margin. We’ve done that by delivering record levels of HMM, including a forecast for 5% savings in our cost of goods sold this year, which is ahead of our long-term trend. This elevated HMM delivery continues to provide fuel to invest into our brands and capabilities for the long term. For our third priority, continuing to drive strong cash generation, we expect to deliver at least 95% free cash flow conversion in fiscal 2025, consistent with the guidance we provided at the start of the year. We remain committed to our long-standing record of deploying our cash in a disciplined and shareholder-friendly manner through capital investments, dividend growth, M&A, and share repurchases. On M&A, we continue to advance our portfolio reshaping ambitions and improve the growth profile of our business. Once our North American Yogurt divestitures and Whitebridge Pet acquisition are closed, General Mills will have turned over approximately 30% of our net sales base since fiscal 2018. In terms of future M&A, our near-term focus is on ensuring our organization is set up to deliver seamless transitions for each of those three transactions. As we look further out, we remain focused on bolt-on acquisitions as our most likely opportunities for M&A. Before transitioning to Kofi, I’ll highlight our updated fiscal 2025 guidance on Slide 17. We reaffirmed our organic net sales guidance, with our current expectations toward the lower end of the range. Adjusted operating profit and adjusted diluted EPS growth are each expected to be 2 points below our prior ranges, reflecting the incremental investments we’re making to support our volume and market share gains. And we remain on track to deliver free cash flow conversion in line with our previous expectation. With that, let me turn it over to Kofi to go into more details on our second-quarter results and the assumptions behind our updated outlook for the year. Kofi Bruce: Thanks, Jeff. And hello everyone. Our second-quarter financial results are summarized on Slide 19. Reported net sales of $5.2 billion were up 2%, and organic net sales were up 1%. Adjusted operating profit of $1.1 billion was up 7% in constant currency, driven by HMM cost savings and higher volume, partially offset by input cost inflation, unfavorable price/mix, and higher SG&A expenses. Adjusted diluted earnings per share totaled $1.40 in the quarter and were up 12% in constant currency, driven by higher adjusted operating profit and a lower share count. As Jeff mentioned, our Q2 results were impacted by certain favorable timing items, including an increase in retailer inventory in NAR due in part to the Thanksgiving holiday shifting from the final week of Q2 last year to the first week of Q3 this year, as well as favorable trade and other expense timing. These items represented approximately a 1.5 point benefit to net sales and a 6 point benefit to operating profit and EPS in the quarter. We expect these timing items to reverse in the second half, with most of the impact in Q3. Slide 20 summarizes the components of total company net sales growth. Organic net sales increased 1% in the quarter, driven by higher organic pound volume, partially offset by lower price/mix. Foreign exchange and the net impact of acquisitions and divestitures were not material to net sales in Q2. Shifting to segment results, second-quarter organic net sales for North America Retail were up 1%. Our organic net sales outpaced Nielsen-measured U.S. retail sales by roughly two points, driven by an increase in retailer inventory due in part to the impact of the later Thanksgiving timing. We expect this retailer inventory build to reverse in the third quarter. Organic net sales in Q2 also benefitted from faster growth in non-measured channels. At the operating unit level, net sales for U.S. Morning Foods increased 4% and U.S. Snacks were up 1%. Net sales for U.S. Meals & Baking Solutions were down 1% and Canada net sales declined 4% in constant currency. As Jeff noted, we strengthened our competitiveness in NAR, with our pound and dollar trends improving in seven of our top ten U.S. categories from Q1 to Q2. On the bottom line, constant-currency segment operating profit in NAR essentially matched year-ago results, driven by HMM cost savings and favorable price/mix, offset by input cost inflation, higher other supply chain costs, and lower volume. Moving on to Slide 22, second-quarter organic net sales for our North America Pet segment were up 5%. This result outpaced our Nielsen-measured retail sales performance by roughly four points. The difference reflected a rebuild of retailer inventory after significant reductions in the second quarters of fiscal 2023 and fiscal 2024. We do not expect to see a material change in retailer inventory in the second half. Net sales were up high-single digits for dry food, up mid-single digits for wet food, and up low-single digits for treats. Q2 represented our fifth consecutive quarter of sequential market share improvement for our U.S. pet food business, with our pound share growing and our dollar share flat in the quarter. On the bottom line, second-quarter North America Pet segment operating profit was up 36% in constant currency, driven by HMM cost savings, higher volume, and lower other supply chain costs, partially offset by unfavorable price/mix and higher SG&A expenses, including an increase in media investment. North America Foodservice organic net sales were up 8% in the quarter, driven by a mid-single digit increase in organic pound volume and positive price/mix. Net sales results were led by strong growth on breads, cereal, and frozen meals. We continued to drive strong market share gains year to date across key channels including K-12 schools, healthcare, and colleges and universities. On the bottom line, second-quarter North America Foodservice segment operating profit was up 24% in constant currency, driven by favorable price/mix. Moving to Slide 24, second-quarter organic net sales for our International segment were down 3%, driven by declines in China and Brazil, partially offset by continued growth in our distributor markets as well as Europe and Australia. As Jeff mentioned, continued macroeconomic consumer headwinds in China drove double-digit declines for our Häagen-Dazs shops traffic in the market, and we are working to mitigate those headwinds by expanding Häagen-Dazs distribution across retail, foodservice, and E-commerce channels. Within our retail outlets, we’ve continued to drive sequential improvement in market share on Häagen-Dazs, reaching share growth in Q2. Second-quarter segment operating profit totaled $24 million compared to $35 million a year ago, driven by unfavorable price/mix and higher SG&A expenses, partially offset by HMM cost savings. Slide 25 summarizes our joint ventures results. In Q2, Cereal Partners Worldwide net sales were up 2% in constant currency, with growth in Latin America partially offset by declines in France and the UK. Häagen-Dazs Japan net sales were up 1% in constant currency, reflecting growth on our handheld formats, partially offset by lower contributions from the timing of new product launches in cup formats. Second-quarter combined after-tax earnings from joint ventures of $30 million were up 23% in constant currency, driven by lower input costs and favorable price/mix at CPW, partially offset by higher SG&A expenses and a decrease in volume at CPW, and higher input costs at Häagen-Dazs Japan. Turning to margin results, our second-quarter adjusted gross margin increased 130 basis points to 36.3% of net sales, driven by HMM cost savings, partially offset by input cost inflation and unfavorable price/mix. Our second-quarter adjusted operating profit margin increased 100 basis points to 20.3%, with benefits from higher adjusted gross margin partially offset by higher SG&A expenses as a percent of net sales. The timing benefit I referenced earlier added roughly 100 basis points to our Q2 adjusted operating profit margin, and we expect that to reverse largely in Q3. Moving on to other noteworthy Q2 income-statement items. Adjusted unallocated corporate expenses decreased $23 million in the quarter, driven by certain favorable one-time items. Second-quarter net interest expense was up $7 million, driven by higher average long-term debt balances. The adjusted effective tax rate of 20.1% compared to 20.8% a year ago, driven by favorable earnings mix by jurisdiction compared to last year. Finally, average diluted shares outstanding in the quarter were down 4% to 560 million, reflecting our continued net share repurchase activity. Our first-half financial results are summarized on Slide 28. Net sales of $10.1 billion essentially matched year-ago results on an organic basis. Adjusted operating profit of $1.9 billion was up 2% in constant currency, while adjusted diluted earnings per share totaled $2.47 and were up 6% in constant currency. Turning to the balance sheet and cash flow on Slide 29, first-half operating cash flow increased 19% to $1.8 billion, driven primarily by a change in accounts payable, partially offset by changes in inventory and other current assets. Capital investments in the first half totaled $301 million. And we returned $1.2 billion in cash to shareholders in the first six months of the year through dividends and net share repurchases. On Slide 30, we’ve provided a few updates to our key financial assumptions for fiscal 2025. As Jeff stated earlier, our improvement in volume and market share is requiring higher promotional investment than we initially planned. A portion of that incremental investment fell in the first half, and we expect a greater portion to hit in the second half. Within cost of goods sold, we continue to expect HMM cost savings to outpace input cost inflation for the full year. We now expect to generate HMM savings of 5% of COGS, and input cost inflation is now expected to be 4% of COGS in fiscal 2025. As we look to the second half of fiscal 2025, the midpoint of our revised guidance implies adjusted operating profit would be down roughly 8% in constant currency. This reflects a 3 point headwind from the reversal of favorable timing items in the first half, a 3 point headwind from incremental growth investments, and a 2 point headwind from a partial reset of incentive compensation. With these assumptions in mind, our updated annual Fiscal 2025 Financial Outlook can be seen on Slide 31. Organic net sales are still expected to range between flat and up 1%, with our current outlook targeting the lower end of that range. Adjusted operating profit is now expected to be down 4% to down 2% in constant currency. Adjusted diluted Earnings Per Share are now expected to be down 3% to down 1% in constant currency. And we continue to expect free cash flow conversion to be at least 95% of adjusted after-tax earnings. Note that our outlook does not include the impact of the North American Yogurt divestitures nor the Whitebridge Pet Brands acquisition, as those transactions have yet to close. With that, let me turn it back to Jeff for some closing remarks. Jeff Harmening: Thanks, Kofi. I’ll close out with a few thoughts. We’re encouraged by the progress we’ve made to accelerate our volume growth and improve our market share trends, driven by our continued focus on delivering remarkable experiences to consumers across the total product offering. To deliver those gains and build on them going forward, we’ve made incremental investments to bring consumers greater value amid a challenging macroeconomic backdrop. I’m confident in our teams, who are operating with agility and doing what’s right for our consumers. And I’m confident that the actions we’re taking will better position General Mills for sustained growth in fiscal 2026 and beyond. End of Q&A:
General Mills, Inc. (NYSE:GIS) Q2 2025 Earnings Overview
- Earnings per share (EPS) of $1.40, surpassing estimates and indicating a 12% year-over-year increase.
- Revenue reached approximately $5.24 billion, exceeding expectations.
- Financial metrics reveal a price-to-earnings (P/E) ratio of 13.93 and a debt-to-equity ratio of 1.58, showcasing the company's robust financial health.
General Mills, Inc. (NYSE:GIS) is a leading global food company known for its wide range of products, including cereals, snacks, and pet foods. The company operates in a competitive market alongside other major players like Kellogg's and Nestlé. On December 18, 2024, General Mills reported its Q2 2025 earnings, showcasing strong financial performance.
General Mills reported earnings per share (EPS) of $1.40, surpassing the estimated $1.22. This represents a 12% increase year over year on a constant currency basis, as highlighted by Zacks. The company's revenue also exceeded expectations, reaching approximately $5.24 billion compared to the estimated $5.14 billion. This performance underscores General Mills' robust financial health.
The earnings call featured key executives, including CEO Jeff Harmening and CFO Kofi Bruce, who provided insights into the company's strategic direction. Analysts from major financial institutions attended the call, reflecting the market's interest in General Mills' performance. The call was conducted in a listen-only mode, allowing participants to focus on the company's financial results and future plans.
General Mills' financial metrics provide further insight into its market valuation. The company has a price-to-earnings (P/E) ratio of approximately 13.93, indicating how the market values its earnings. Its price-to-sales ratio is about 1.79, reflecting the market's valuation of its revenue. The enterprise value to sales ratio stands at around 2.40, suggesting how the company's total value compares to its sales.
The company's financial leverage is highlighted by a debt-to-equity ratio of approximately 1.58. This ratio indicates the extent to which General Mills is financing its operations through debt. Additionally, the current ratio of around 0.92 suggests the company's ability to cover its short-term liabilities with its short-term assets. These metrics provide a comprehensive view of General Mills' financial position.
General Mills Beats Q2 Expectations but Lowers Full-Year Profit Forecast
General Mills (NYSE:GIS) delivered stronger-than-expected second-quarter results, with adjusted earnings per share of $1.40 surpassing analyst estimates of $1.22. Revenue rose 2% year-over-year to $5.2 billion, beating the forecasted $5.14 billion. However, despite the solid quarterly performance, shares dipped more than 4% as the company reduced its full-year profit outlook.
The company now anticipates adjusted operating profit to decline 2–4% in constant currency, a revision from its prior guidance of flat to down 2%. The adjustment reflected rising promotional investments and additional challenges expected in the second half of the fiscal year.
While the company achieved progress in key areas, such as accelerating volume growth and returning its North America Pet business to positive growth, the outlook for organic net sales growth in fiscal 2025 narrowed to the lower end of the 0–1% range. Adjusted earnings per share are now projected to decline 1–3% in constant currency, down from the earlier guidance of -1% to +1%.
Second-quarter results were bolstered by temporary factors, including increased retailer inventories, which are expected to reverse in the latter half of the year. Performance varied across segments, with flat sales in North America Retail and a 5% sales increase in the North America Pet business.
Despite progress in several areas, General Mills faces headwinds in maintaining momentum, with the updated guidance reflecting the challenges ahead.
General Mills, Inc. (NYSE:GIS) Quarterly Earnings Insight
- Analysts estimate an EPS of $1.22 and projected revenue of $5.14 billion for the upcoming quarterly earnings.
- There is a keen interest in General Mills' financial performance, with a focus on key metrics beyond just revenue and profit figures.
- Financial ratios such as a P/E ratio of approximately 15.56 and a price-to-sales ratio of about 1.87 provide insights into the company's market valuation.
General Mills, Inc. (NYSE:GIS) is a leading global food company known for its wide range of products, including cereals, snacks, and pet foods. As a major player in the consumer goods sector, it competes with other giants like Kellogg's and Nestlé. The company is set to release its quarterly earnings on December 18, 2024, with analysts estimating an EPS of $1.22 and projected revenue of $5.14 billion.
As highlighted by Benzinga, analysts have been revising their forecasts ahead of the earnings call, indicating a keen interest in General Mills' financial performance. The focus is not just on the typical revenue and profit figures but also on key metrics that could provide deeper insights into the company's operations. This anticipation suggests that the upcoming earnings report could significantly impact the stock's price.
Despite the projected revenue increase, analysts expect a decline in earnings for the quarter ending November 2024. This expectation is crucial for understanding the company's earnings outlook. If General Mills surpasses these estimates, the stock might see an upward movement. Conversely, failing to meet expectations could lead to a decline, making the earnings call a pivotal event for investors.
General Mills' financial ratios provide further context for its valuation. With a P/E ratio of approximately 15.56, investors are willing to pay $15.56 for each dollar of earnings. The price-to-sales ratio of about 1.87 indicates that investors pay $1.87 for every dollar of sales. These metrics help investors gauge the company's market value relative to its earnings and sales.
The company's enterprise value to operating cash flow ratio is around 14.05, offering insight into its valuation compared to cash flow. An earnings yield of about 6.43% provides a perspective on shareholder returns. Additionally, a debt-to-equity ratio of approximately 1.44 highlights the proportion of debt in financing assets. The current ratio of around 0.66 suggests the company's ability to cover short-term liabilities with short-term assets.
General Mills (NYSE:GIS) Price Target Update and Financial Outlook
- Bryan Spillane of Bank of America Securities updates General Mills (NYSE:GIS) price target to $78, indicating a potential increase of about 4.36% from its current price.
- The sale of General Mills' North American Yogurt business is part of a broader strategy to streamline operations, despite causing a minor stock price drop of 0.2%.
- Wall Street forecasts a downturn in performance for the quarter ended August 2024, with earnings per share expected to decrease by 3.7% year over year to $1.05, and revenue projected to fall by 2.5% to $4.78 billion.
Bryan Spillane of Bank of America Securities recently updated the price target for General Mills (NYSE:GIS) to $78, suggesting a potential increase of about 4.36% from its current price of $74.74. This adjustment reflects a positive outlook on the company's financial future. General Mills, a leading global food company, is known for its wide range of products, including cereals, snacks, and yogurt. The company operates in a competitive industry, facing off against other food giants like Kellogg's and PepsiCo.
The anticipation around General Mills' first-quarter earnings is high, especially considering the company's strategic moves and the broader consumer landscape. Analysts are keen to see how General Mills' recent sale of its North American Yogurt business to Lactalis and Sodiaal, announced on September 12, will impact its financials. This sale, which led to a minor drop in stock price by 0.2%, closing at $73.01, is part of the company's broader strategy to streamline its operations and focus on its core brands.
Wall Street forecasts for the quarter ended August 2024 suggest a slight downturn in performance compared to the previous year, with earnings per share expected to decrease by 3.7% year over year to $1.05, and revenue projected to fall by 2.5% to $4.78 billion. These projections come amidst a minor adjustment in the consensus estimate for the company's earnings per share, which saw a downward revision of 0.1% over the last 30 days. This adjustment reflects the analysts' reevaluation of their initial forecasts, indicating a cautious stance on the company's short-term financial outlook.
The significance of these earnings estimate revisions cannot be understated, as they often influence investor reactions to a company's stock. Historical data shows a strong correlation between the direction of earnings estimate revisions and the stock's short-term price movements. As General Mills prepares to release its first-quarter earnings, investors and analysts alike will be closely watching how these factors play out in the company's financial performance.
Ahead of the earnings call, the stock has seen slight fluctuations, trading at $74.625, with a minor change of -0.005%. The stock's performance over the past year, ranging from a low of $60.33 to a high of $75.9, alongside a market capitalization of approximately $41.54 billion, underscores the company's significant presence in the market. With these financial dynamics at play, the upcoming earnings report will be crucial in determining General Mills' trajectory in the competitive food industry landscape.
General Mills, Inc. (NYSE:GIS) Stock Target Price Fluctuations and Analyst Sentiment
- Initial average target price was set at $72.75, later adjusted to $69.00, and recently increased to $71.50.
- Credit Suisse analyst Robert Moskow anticipates General Mills to surpass earnings expectations, setting a specific price target of $68.
- The adjustments in target prices reflect a cautiously optimistic outlook on General Mills' financial health and growth prospects.
General Mills, Inc. (NYSE:GIS), a prominent player in the global food industry, has been navigating the complex landscape of consumer preferences and market dynamics with its diverse product range. Known for its iconic brands like Cheerios and Häagen-Dazs, General Mills has established a strong presence in various segments, including retail and pet food. The company's ability to adapt and innovate has been crucial in maintaining its competitive edge against rivals in the food sector.
The stock target price for General Mills has experienced notable changes over the past year, reflecting the evolving analyst sentiment towards the company. Initially, the average target price was set at $72.75, showcasing a positive outlook. However, this figure was adjusted to $69.00 in the last quarter, indicating a tempered expectation. Recently, there has been a slight uptick to $71.50, suggesting a resurgence of optimism among analysts. This fluctuation in target prices underscores the dynamic nature of market perceptions and the impact of various factors on investor confidence.
Credit Suisse analyst Robert Moskow's recent analysis sheds light on the reasons behind the renewed confidence in General Mills. Moskow anticipates that the company will surpass earnings expectations in its upcoming report, driven by a favorable combination of factors that historically lead to earnings beats. This optimism is further supported by a specific price target of $68 set by Credit Suisse, indicating a belief in the company's strong performance potential. Such analyses play a significant role in shaping the consensus target price and reflect the underlying confidence in General Mills' strategic direction and market positioning.
The anticipation of General Mills exceeding earnings expectations is a testament to the company's strategic initiatives and its ability to navigate market challenges. The analysis by Credit Suisse highlights the importance of understanding the factors that contribute to financial performance, including product mix and market trends. As General Mills prepares for its earnings announcement, investors and stakeholders are closely watching, with the recent adjustments in target prices indicating a cautiously optimistic outlook on the company's financial health and growth prospects.
While the consensus target price for General Mills has seen adjustments over the past year, the underlying factors contributing to these changes are crucial for investors to consider. The company's broad portfolio, strategic market responses, and the potential to surpass earnings expectations are key drivers of analyst sentiment. As General Mills continues to adapt to consumer preferences and market dynamics, the evolving target prices reflect the ongoing assessment of its financial outlook and investment potential.
General Mills Shares Fall on Outlook Cut
General Mills (NYSE:GIS) experienced a more than 2% decline in its shares intra-day today after the company revised its full-year forecast downwards.
In its fiscal second quarter, General Mills reported an adjusted earnings per share (EPS) of $1.25, an improvement from $1.10 in the same period last year and higher than the anticipated $1.15. However, net sales decreased by 1.6% year-over-year to $5.14 billion, falling short of the expected $5.35 billion.
The company now anticipates a slower volume recovery in fiscal 2024. This updated outlook is based on a more conservative consumer economic forecast and a quicker return to normal competitive availability on store shelves.
Consequently, organic net sales projections have been adjusted to a range between -1% and flat, a significant change from the previously estimated growth of 3-4%. This adjustment reflects the expected slower volume recovery in the upcoming fiscal year.
Additionally, General Mills now forecasts adjusted operating profit and adjusted diluted EPS to grow by 4-5% in constant currency, a slight decrease from the previously projected growth range of 4-6% in constant currency.
General Mills Reports Better Than Expected Q1 Earnings Results
General Mills (NYSE:GIS) reported a decline in adjusted earnings for the first quarter, but it still exceeded expectations. This achievement can be attributed to the stabilization of supply chains and the resilience of consumers in the face of inflationary pressures.
In the first quarter, General Mills reported earnings per share (EPS) of $1.09, surpassing the analyst estimate of $1.08. The company's revenue for the quarter reached $4.9 billion, slightly ahead of the Street estimate of $4.89 billion.
Furthermore, General Mills has reaffirmed its outlook for the fiscal year 2024, expressing confidence in driving organic net sales growth through robust marketing, innovation, in-store support, and effective pricing strategies. The company also expects a moderation in the rate of input cost inflation, along with a reduction in disruptions within its supply chains.
General Mills anticipates organic net sales growth of 3 to 4 percent and projects a 4 to 6 percent increase in both adjusted operating profit and adjusted diluted EPS in constant currency.
