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General Mills (GIS) Q4 Earnings: Is Disappointment in Store?
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General Mills Inc. (GIS - Free Report) is set to report fourth-quarter fiscal 2017 results on Jun 28, before the market opens. Last quarter, the company delivered a positive earnings surprise of 1.41%.
This branded consumer foods’ company delivered a positive earnings surprise in two of the last four quarters, with an average beat of 2.66%.
Let’s see how things are shaping up for this announcement.
Although General Mills is making efforts to drive revenue growth through consumer-focused innovations and marketing initiatives in its key businesses, the company is expected to witness muted sales growth in the fourth quarter of fiscal 2017. This is due to continued volume declines in North America.
Sales and profits at the North America Retail segment, which accounted for about 66.1% of the company’s total sales in fiscal third quarter, have been soft due to lower demand amid weak food industry trends and changing consumer preference. The company also expects its organic sales growth to drop 4% in fiscal 2017.
However, much like other food companies, General Mills, is focusing on cost-cutting initiatives to boost margin amid soft sales. During the last reported quarter, the company’s gross margin increased 20 basis points to 35% helped by cost-saving measures. For 2017, the company expects to generate $380 million in savings from cost of goods sold, which in turn will aid margin expansion. The company is also witnessing impressive margin expansion with adjusted operating margin expanding 100 basis points in the last reported quarter. Adjusted operating margin is expected to expand 120 basis points to 18% for fiscal 2017.
For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 71 cents, reflecting an increase of 8.2% year over year. Meanwhile, our estimate for revenues is pegged at $3.75 billion, implying a 4.5% decrease.
What Our Model Indicates
Our proven model does not conclusively show that General Mills is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for General Mills is -7.04%, because the Most Accurate estimate stands at 66 cents, while the Zacks Consensus Estimate is pegged at 71 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Mills’ Zacks Rank #4 (Sell) decreases the predictive power of ESP and its negative ESP of 7.04% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are some companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Coty Inc. (COTY - Free Report) has an Earnings ESP of +6.25% and a Zacks Rank #3. The company is expected to report its quarterly results on Aug 3.
Tupperware Brands Corporation (TUP - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank #2. The company is expected to report its quarterly results on Jul 19.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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General Mills (GIS) Q4 Earnings: Is Disappointment in Store?
General Mills Inc. (GIS - Free Report) is set to report fourth-quarter fiscal 2017 results on Jun 28, before the market opens. Last quarter, the company delivered a positive earnings surprise of 1.41%.
This branded consumer foods’ company delivered a positive earnings surprise in two of the last four quarters, with an average beat of 2.66%.
Let’s see how things are shaping up for this announcement.
General Mills, Inc. Price and EPS Surprise
General Mills, Inc. price-eps-surprise | General Mills, Inc. Quote
Factors to Consider
Although General Mills is making efforts to drive revenue growth through consumer-focused innovations and marketing initiatives in its key businesses, the company is expected to witness muted sales growth in the fourth quarter of fiscal 2017. This is due to continued volume declines in North America.
Sales and profits at the North America Retail segment, which accounted for about 66.1% of the company’s total sales in fiscal third quarter, have been soft due to lower demand amid weak food industry trends and changing consumer preference. The company also expects its organic sales growth to drop 4% in fiscal 2017.
However, much like other food companies, General Mills, is focusing on cost-cutting initiatives to boost margin amid soft sales. During the last reported quarter, the company’s gross margin increased 20 basis points to 35% helped by cost-saving measures. For 2017, the company expects to generate $380 million in savings from cost of goods sold, which in turn will aid margin expansion. The company is also witnessing impressive margin expansion with adjusted operating margin expanding 100 basis points in the last reported quarter. Adjusted operating margin is expected to expand 120 basis points to 18% for fiscal 2017.
For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 71 cents, reflecting an increase of 8.2% year over year. Meanwhile, our estimate for revenues is pegged at $3.75 billion, implying a 4.5% decrease.
What Our Model Indicates
Our proven model does not conclusively show that General Mills is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for General Mills is -7.04%, because the Most Accurate estimate stands at 66 cents, while the Zacks Consensus Estimate is pegged at 71 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Mills’ Zacks Rank #4 (Sell) decreases the predictive power of ESP and its negative ESP of 7.04% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are some companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Coty Inc. (COTY - Free Report) has an Earnings ESP of +6.25% and a Zacks Rank #3. The company is expected to report its quarterly results on Aug 3.
The Kraft Heinz Company (KHC - Free Report) has an Earnings ESP of +4.17% and a Zacks Rank #3. The company is expected to report its quarterly results on Aug 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tupperware Brands Corporation (TUP - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank #2. The company is expected to report its quarterly results on Jul 19.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>