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General Mills (GIS) TNT Crust Buyout to Fuel Accelerate Strategy

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General Mills Inc. (GIS - Free Report) is focused on reshaping the portfolio to accelerate growth. Keeping along these lines, the company signed a definitive agreement to acquire TNT Crust — a manufacturer of high-quality frozen pizza crusts for regional and national pizza chains, foodservice distributors and retail outlets. At present, TNT Crust is a portfolio company of Peak Rock Capital.

Per the agreement, General Mills will take over two production units in Green Bay, WI, and another facility in St. Charles, MO. The transaction, which is expected to close in first-quarter fiscal 2023, is likely to be funded by cash and short-term borrowings.

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The acquisition of TNT Crust will help General Mills to advance its Accelerate strategy. The acquisition also fortifies the company’s position in the fast-growing away-from-home frozen baked goods category. The rapidly-growing TNT Crust business compliments General Mills’ frozen baked goods platform by adding scale in the category.

The TNT Crust business leveraged its solid relationships with key foodservice distributors and pizza chain operators and differentiated products to fuel double-digit compound annual net sales growth in the last four years. The business generated total net sales of almost $100 million in 2021.

The Accelerate Strategy Holds Promise

General Mills is focused on its Accelerate strategy (unveiled in February 2021), which helps the company decide how to win and where to play to boost profitability and enhance shareholders’ returns in the long run. Under how to win, General Mills focuses on four pillars designed to provide a competitive advantage. These include brand building, undertaking innovations, unleashing scale and maintaining business strength. The where to play principle is outlined to enhance the company’s capabilities to generate profitability through geographic and product prioritization and portfolio restructuring. This includes prioritizing investment, investing in five Global Platforms, driving growth in Local Gem brands and reshaping the portfolio.

With regard to reshaping the portfolio, the company concluded the acquisition of the pet treats business on Jul 6, 2021. The acquired business is a pioneer in natural meat treats for pets. General Mills noted that the acquisition bodes well amid growing pet-food category trends stemming from the humanization of pets, especially in the pandemic. In November 2021, General Mills divested 51% controlling interest in its European Yoplait operations to Sodiaal.

Plans to acquire TNT Crust and other portfolio reshaping moves help General Mills advance the Accelerate strategy. Shares of the Zacks Rank #3 (Hold) company have increased 12.2% in the past year against the industry’s 4.7% decline.

3 Hot Food Stocks

Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , McCormick & Company (MKC - Free Report) and Medifast (MED - Free Report) .

Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy). SYY has a trailing four-quarter earnings surprise of 9.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Sysco’s current financial year sales and EPS suggests growth of 28.9% and 111.1%, respectively, from the year-ago reported number.

McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.

The Zacks Consensus Estimate for McCormick’s current financial year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure.

Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2. MED has a trailing four-quarter earnings surprise of 12.9%, on average.

The Zacks Consensus Estimate for Medifast’ current financial year sales and EPS suggests growth of 18.9% and 11.5%, respectively, from the year-ago reported figure.