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General Mills to Report (GIS) Q3 Earnings: What's in Store?
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General Mills Inc. (GIS - Free Report) is set to report third-quarter fiscal 2018 results on Mar 21, before market open. Last quarter, the company’s earnings met the Zacks Consensus Estimate. This branded consumer foods company delivered a positive earnings surprise in two of the trailing four quarters, the average miss being 0.89%.
General Mills has been reporting dismal revenues since the last few quarters. Much like other U.S. food giants, General Mills too is having a tough time due to the shift in consumer preference toward natural and organic food.
Resultantly, the company’s shares have declined 10.3% in the last three months, comparing unfavorably with its industry’s decline of 4.7%.
Factors to Consider
The company’s total sales improved 2.1% in the last reported quarter, after many quarters of declines. Although General Mills is making significant 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 third quarter of fiscal 2018. This is due to continued volume declines in North America. Yet, the company expects product innovations to strengthen its brands and bring in some improvements.
Segment Wise: Sales and profits at the North America Retail segment, accounting for about 66% of the company’s total sales, have been soft due to lower demand amid weak food industry trends and changing consumer preferences. The trend continued in the first half of fiscal 2018 with segment revenues declining 1.8% in the period. Weak sales in the company’s yogurt category is expected to weigh on its top-line performance in fiscal third quarter.
Nonetheless, the company expects product innovations like Chocolate Peanut Butter Cheerios, Oui by Yoplait, fruit snacks and Lärabarand Nature Valley snack bars to bring improvements in cereals, snacks, and frozen meals in the to-be-reported quarter.
General Mills’ North America Retail segment sales are expected to witness 0.9% growth year over year but decline 9.1% sequentially to $2.5 billion, per the Zacks Consensus Estimate.
Sales in the Convenience Stores & Food Service segment are likely to witness growth of 1.2% from the prior-year quarter but decline 11.3% sequentially. Europe & Australia is projected to report revenues of $455 million, higher than $424.5 million in the year-ago quarter but lower than $467 million in the preceding one. Additionally, the consensus estimate for Asia & Latin America segment revenues of $438 million indicates an increase from $421.2 million in the year-ago quarter but a decrease from $448 million in the prior quarter.
Overall, for the fiscal third quarter, the Zacks Consensus Estimate for revenues stands at $3.88 billion, implying 2.3% year-over-year growth.
Meanwhile, apart from higher revenues, lower volumes and higher input costs are creating pressure on margins, despite having profound cost-cut initiatives to boost margins amid soft sales. General Mills’ adjusted gross margin contracted 240 basis points (bps), while its adjusted operating margin plunged 220 bps year over year in its last reported quarter. The downside was mainly due to higher input costs and increase in advertising media expenses that offset the benefits of its cost-savings plan.
That said, the company expects the margin headwinds to lessen in the second half of fiscal 2018, thereby helping it to boost margins. Primarily, General Mills anticipates its volume to improve, banking on innovation in brand building.
Overall, an expected decline in volumes, primarily in North America, higher promotional expenses, as planned for the second half of fiscal 2018, and rising input costs are likely to remain a drag on its bottom line in the to-be-reported quarter. Also, General Mills’ focus on reducing its cost of goods, sold through its margin-improvement plan, along with lower share count is anticipated to give considerable support to its EPS growth.
For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at 78 cents, reflecting an increase of 8.3% year over year.
Here is what our quantitative model predicts.
General Mills has the right combination of two ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — which increases the odds of an earnings beat.
Zacks ESP: The Earnings ESP for General Mills is +0.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Mills carries a Zacks Rank #2 (Buy).
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.
Other Stocks to Consider
Here are a few companies in the Zacks 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.
Avon Products, Inc. has an Earnings ESP of +100% and a Zacks Rank #3. The company is expected to report quarterly results on May 3.
Flowers Foods, Inc. (FLO - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #2. The company is expected to report quarterly results on May 16.
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
General Mills to Report (GIS) Q3 Earnings: What's in Store?
General Mills Inc. (GIS - Free Report) is set to report third-quarter fiscal 2018 results on Mar 21, before market open. Last quarter, the company’s earnings met the Zacks Consensus Estimate. This branded consumer foods company delivered a positive earnings surprise in two of the trailing four quarters, the average miss being 0.89%.
General Mills has been reporting dismal revenues since the last few quarters. Much like other U.S. food giants, General Mills too is having a tough time due to the shift in consumer preference toward natural and organic food.
Resultantly, the company’s shares have declined 10.3% in the last three months, comparing unfavorably with its industry’s decline of 4.7%.
Factors to Consider
The company’s total sales improved 2.1% in the last reported quarter, after many quarters of declines. Although General Mills is making significant 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 third quarter of fiscal 2018. This is due to continued volume declines in North America. Yet, the company expects product innovations to strengthen its brands and bring in some improvements.
Segment Wise: Sales and profits at the North America Retail segment, accounting for about 66% of the company’s total sales, have been soft due to lower demand amid weak food industry trends and changing consumer preferences. The trend continued in the first half of fiscal 2018 with segment revenues declining 1.8% in the period. Weak sales in the company’s yogurt category is expected to weigh on its top-line performance in fiscal third quarter.
Nonetheless, the company expects product innovations like Chocolate Peanut Butter Cheerios, Oui by Yoplait, fruit snacks and Lärabarand Nature Valley snack bars to bring improvements in cereals, snacks, and frozen meals in the to-be-reported quarter.
General Mills’ North America Retail segment sales are expected to witness 0.9% growth year over year but decline 9.1% sequentially to $2.5 billion, per the Zacks Consensus Estimate.
Sales in the Convenience Stores & Food Service segment are likely to witness growth of 1.2% from the prior-year quarter but decline 11.3% sequentially. Europe & Australia is projected to report revenues of $455 million, higher than $424.5 million in the year-ago quarter but lower than $467 million in the preceding one. Additionally, the consensus estimate for Asia & Latin America segment revenues of $438 million indicates an increase from $421.2 million in the year-ago quarter but a decrease from $448 million in the prior quarter.
Overall, for the fiscal third quarter, the Zacks Consensus Estimate for revenues stands at $3.88 billion, implying 2.3% year-over-year growth.
Meanwhile, apart from higher revenues, lower volumes and higher input costs are creating pressure on margins, despite having profound cost-cut initiatives to boost margins amid soft sales. General Mills’ adjusted gross margin contracted 240 basis points (bps), while its adjusted operating margin plunged 220 bps year over year in its last reported quarter. The downside was mainly due to higher input costs and increase in advertising media expenses that offset the benefits of its cost-savings plan.
That said, the company expects the margin headwinds to lessen in the second half of fiscal 2018, thereby helping it to boost margins. Primarily, General Mills anticipates its volume to improve, banking on innovation in brand building.
Overall, an expected decline in volumes, primarily in North America, higher promotional expenses, as planned for the second half of fiscal 2018, and rising input costs are likely to remain a drag on its bottom line in the to-be-reported quarter. Also, General Mills’ focus on reducing its cost of goods, sold through its margin-improvement plan, along with lower share count is anticipated to give considerable support to its EPS growth.
For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at 78 cents, reflecting an increase of 8.3% year over year.
Here is what our quantitative model predicts.
General Mills has the right combination of two ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — which increases the odds of an earnings beat.
Zacks ESP: The Earnings ESP for General Mills is +0.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Mills carries a Zacks Rank #2 (Buy).
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.
Other Stocks to Consider
Here are a few companies in the Zacks 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.
Conagra Brands Inc. (CAG - Free Report) has an Earnings ESP of +4.24% and a Zacks Rank #3. The company is slated to report quarterly results on Mar 22. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avon Products, Inc. has an Earnings ESP of +100% and a Zacks Rank #3. The company is expected to report quarterly results on May 3.
Flowers Foods, Inc. (FLO - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #2. The company is expected to report quarterly results on May 16.
General Mills, Inc. Price and EPS Surprise
General Mills, Inc. Price and EPS Surprise | General Mills, Inc. Quote
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>