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General Mills Inc. (GIS - Analyst Report) recently maintained its previously-provided outlook for fiscal 2014 at the Morgan Stanley Global Consumer Conference.

In fiscal 2014, General Mills expects stronger earnings growth and increased cash returns to shareholders. Growth in fiscal 2014 is expected to be in line with its long-term targets.

Earnings per share are likely to grow at a high single-digit rate in the range of $2.87 to $2.90. Earnings growth in fiscal 2014 is expected to be driven by strong innovation, increased brand support, modest cost inflation, increased contribution from the Yoki and Yoplait acquisitions and aggressive cost savings.

The company continues to expect net sales to grow at a low single-digit rate and exceed $18 billion in fiscal 2014 on the back of product innovation and contribution from new businesses. The U.S. Retail business is expected to benefit from new product launches and increased innovation, while the international business will gain largely from the newly-acquired businesses.

Adjusted gross margin is projected to improve modestly from the 2013 levels. Segment operating profit is expected to grow in mid single-digits. The company expects margins to expand in fiscal 2014 on the back of cost savings and productivity initiatives. Operating margin is expected to increase in each of the three business segments — U.S. Retail, Bakeries and Foodservice and International.

Commodity cost inflation is expected to be 3% in fiscal 2014, lower than an average of 4%–5% in recent years. Inflation is expected to be higher in the second quarter of fiscal 2014 than in the first. The second-quarter results are expected to be announced on Dec 18, 2013. Management also stated that the food/beverage sales have slowed a bit across key developed markets in the second quarter.

Moreover, the company plans to increase dividends and share buybacks in the year, thus offering greater shareholders’ value. The increased buybacks are expected to lower the average number of shares outstanding by 2% in fiscal 2014. The company increased its dividend by 15% effective from the quarterly dividend paid on Aug 1.

Other Stocks to Consider

General Mills carries a Zacks Rank #4 (Sell). Other food companies which are currently doing well include Omega Protein Corp, The J. M. Smucker Co. (SJM - Analyst Report) and Pinnacle Foods Inc.(PF - Snapshot Report). While Omega Protein carries a Zacks Rank #1 (Strong Buy), Pinnacle and Smucker hold a Zacks Rank #2 (Buy).

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