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Buy General Mills (GIS) or Darden (DRI) Stock with Earnings Approaching?
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This week’s earnings line up will be highlighted by two top-rated Zacks stocks in General Mills (GIS - Free Report) ) and Darden Restaurants (DRI - Free Report) ) with both set to report their fiscal third-quarter reports on March 23.
Let’s see if it’s time for investors to buy either stock as these companies look poised to benefit from higher food consumption.
With General Mills' Food-Miscellaneous Industry currently in the top 39% of over 250 Zacks Industries the iconic global manufacturer and marketer of branded consumer food appears to be a beneficiary.
To that point, General Mills stock sports a Zacks Rank #2 (Buy) at the moment with earnings estimate revisions continuing to trend higher before its Q3 report.
Image Source: Zacks Investment Research
Q3 Preview & Outlook
General Mills’ Q3 earnings are projected at $0.91 per share, up 8% from Q3 2022. Even better, the Zacks Expected Surprise Prediction (ESP) indicates General Mills could beat bottom-line expectations with the Most Accurate Estimate having Q3 EPS at $0.94. On the top line, third-quarter sales are expected to be $4.91 billion, also up 8% from the prior year quarter.
Image Source: Zacks Investment Research
Overall, General Mills earnings are now forecasted to jump 6% in fiscal 2023 and rise another 5% in FY24 at $4.40 per share. Sales are expected to be up 5% this year and rise another 3% in FY24 to $20.57 billion. More importantly, fiscal 2024 would represent 22% growth from pre-pandemic levels with 2019 sales at $16.86 billion.
Performance & Valuation
General Mills stock is down -3% year to date and near the Food-Miscellaneous Markets -4% while trailing the S&P 500’s +5%. However, over the last two years, GIS stock is up +32% to crush the benchmark and its Zacks Subindustry’s -3%.
Image Source: Zacks Investment Research
Trading around $81 per share, GIS stock trades at 19.3X forward earnings which is near the industry average of 18.2X. This is also below its decade high of 23.5X and closer to the median of 17.5X with the rising earnings estimates offering further support.
Darden Restaurants is also positioned to benefit from a strong business environment and higher food consumption with its Retail-Restaurants Industry in the top 19% of all Zacks Industries.
Darden is one of the largest casual dining restaurant operators in the world with operations in the U.S. and Canada that include Olive Garden and Longhorn Steakhouse. Sporting a Zacks Rank #2 (Buy) Darden’s earnings estimate revisions have trended higher throughout the quarter.
Image Source: Zacks Investment Research
Q3 Preview & Outlook
The Zacks Consensus for Darden’s Q3 earnings is $2.24 per share, which would be a 16% increase from Q3 2022 EPS of $1.93. The Zacks ESP indicates Darden could slightly beat earnings expectations with the Most Accurate Estimate at $2.25 a share. Sales for the quarter are expected to be $2.72 billion, up 11% from the prior year quarter.
Image Source: Zacks Investment Research
Furthermore, Darden’s earnings are now forecasted to rise 6% this year and climb 10% in FY24 at $8.66 per share. Sales are projected to jump 8% in FY23 and rise another 5% in FY24 to $10.99 billion. More impressive, fiscal 2024 would represent 29% growth from pre-pandemic levels with 2019 sales at $8.51 billion.
Performance & Valuation
Darden stock is up +11% YTD to top the S&P 500 and the Retail-Restaurant Markets +4%. Even better, over the last three years Darden stock is up a very stellar +274% to largely outperform the benchmark and its Zack Subindustry’s +79%.
Image Source: Zacks Investment Research
Darden stock currently trades at $153 per share and 19.4X forward earnings which is nicely beneath the industry average of 21.6X. Darden also trades 56% below its decade-long high of 44.5X and on par with the median of 19.2X.
Image Source: Zacks Investment Research
Takeaway
General Mills and Darden’s price-to-earnings valuations are still attractive relative to their past on top of earnings estimate revisions trending higher. The top and bottom line growth of both companies remains intriguing and investors may want to consider these stocks as their strong performances over the last few years could continue, especially if the Q3 reports are strong.
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Buy General Mills (GIS) or Darden (DRI) Stock with Earnings Approaching?
This week’s earnings line up will be highlighted by two top-rated Zacks stocks in General Mills (GIS - Free Report) ) and Darden Restaurants (DRI - Free Report) ) with both set to report their fiscal third-quarter reports on March 23.
Let’s see if it’s time for investors to buy either stock as these companies look poised to benefit from higher food consumption.
General Mills (GIS - Free Report)
With General Mills' Food-Miscellaneous Industry currently in the top 39% of over 250 Zacks Industries the iconic global manufacturer and marketer of branded consumer food appears to be a beneficiary.
To that point, General Mills stock sports a Zacks Rank #2 (Buy) at the moment with earnings estimate revisions continuing to trend higher before its Q3 report.
Image Source: Zacks Investment Research
Q3 Preview & Outlook
General Mills’ Q3 earnings are projected at $0.91 per share, up 8% from Q3 2022. Even better, the Zacks Expected Surprise Prediction (ESP) indicates General Mills could beat bottom-line expectations with the Most Accurate Estimate having Q3 EPS at $0.94. On the top line, third-quarter sales are expected to be $4.91 billion, also up 8% from the prior year quarter.
Image Source: Zacks Investment Research
Overall, General Mills earnings are now forecasted to jump 6% in fiscal 2023 and rise another 5% in FY24 at $4.40 per share. Sales are expected to be up 5% this year and rise another 3% in FY24 to $20.57 billion. More importantly, fiscal 2024 would represent 22% growth from pre-pandemic levels with 2019 sales at $16.86 billion.
Performance & Valuation
General Mills stock is down -3% year to date and near the Food-Miscellaneous Markets -4% while trailing the S&P 500’s +5%. However, over the last two years, GIS stock is up +32% to crush the benchmark and its Zacks Subindustry’s -3%.
Image Source: Zacks Investment Research
Trading around $81 per share, GIS stock trades at 19.3X forward earnings which is near the industry average of 18.2X. This is also below its decade high of 23.5X and closer to the median of 17.5X with the rising earnings estimates offering further support.
Image Source: Zacks Investment Research
Darden Restaurants (DRI - Free Report)
Darden Restaurants is also positioned to benefit from a strong business environment and higher food consumption with its Retail-Restaurants Industry in the top 19% of all Zacks Industries.
Darden is one of the largest casual dining restaurant operators in the world with operations in the U.S. and Canada that include Olive Garden and Longhorn Steakhouse. Sporting a Zacks Rank #2 (Buy) Darden’s earnings estimate revisions have trended higher throughout the quarter.
Image Source: Zacks Investment Research
Q3 Preview & Outlook
The Zacks Consensus for Darden’s Q3 earnings is $2.24 per share, which would be a 16% increase from Q3 2022 EPS of $1.93. The Zacks ESP indicates Darden could slightly beat earnings expectations with the Most Accurate Estimate at $2.25 a share. Sales for the quarter are expected to be $2.72 billion, up 11% from the prior year quarter.
Image Source: Zacks Investment Research
Furthermore, Darden’s earnings are now forecasted to rise 6% this year and climb 10% in FY24 at $8.66 per share. Sales are projected to jump 8% in FY23 and rise another 5% in FY24 to $10.99 billion. More impressive, fiscal 2024 would represent 29% growth from pre-pandemic levels with 2019 sales at $8.51 billion.
Performance & Valuation
Darden stock is up +11% YTD to top the S&P 500 and the Retail-Restaurant Markets +4%. Even better, over the last three years Darden stock is up a very stellar +274% to largely outperform the benchmark and its Zack Subindustry’s +79%.
Image Source: Zacks Investment Research
Darden stock currently trades at $153 per share and 19.4X forward earnings which is nicely beneath the industry average of 21.6X. Darden also trades 56% below its decade-long high of 44.5X and on par with the median of 19.2X.
Image Source: Zacks Investment Research
Takeaway
General Mills and Darden’s price-to-earnings valuations are still attractive relative to their past on top of earnings estimate revisions trending higher. The top and bottom line growth of both companies remains intriguing and investors may want to consider these stocks as their strong performances over the last few years could continue, especially if the Q3 reports are strong.