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General Mills (GIS) Poised on Key Priorities & Pet Segment Sales
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General Mills Inc. (GIS - Free Report) is benefiting from its focus on the Accelerate strategy and key priorities. The company’s solid Pet segment sales are a key driver. The branded consumer food company is committed to undertaking cost-control moves and pricing initiatives amid a rising inflationary environment.
Let’s delve deeper.
Image Source: Zacks Investment Research
Growth Initiatives on Track
General Mills is focused on its Accelerate strategy (unveiled in February 2021), which helps the company choose how to win and where to play to boost profitability and enhance shareholders’ returns. Under how to win, General Mills is focused on four pillars that are designed to provide a competitive advantage. These include brand building, undertaking innovations, unleashing scale and maintaining business strength. 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.
General Mills is on track with its three key priorities for fiscal 2022, which go in line with the Accelerate strategy. The company plans to continue competing effectively – which includes prioritizing core markets, local gem brands and global platforms alongside utilizing its innovation and brand-building capacities. The company is focused on undertaking cost control moves, including Holistic Margin Management (HMM) productivity program, Strategic Revenue Management (SRM) pricing initiatives and endeavors to counter input cost inflation and other cost woes. Thirdly, management is focused on actions related to reshaping the portfolio and the organization.
Recently, management inked a deal to offload its Helper main meals and Suddenly Salad side dishes businesses to Eagle Family Foods Group (which is a portfolio firm of Kelso & Company).This highlights the company’s focus on reshaping the portfolio and concentrating on areas with higher growth potential. In May 2022, GIS 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.
Pet Segment: Key Driver
Solid Pet segment sales are a key growth driver for General Mills. During the third quarter of fiscal 2022, revenues in the Pet Segment came in at $567.7 million, up 30% year over year on the back of solid volume growth and positive net price realization as well as mix. Net sales included 14 points of gains from the pet treats business buyout (concluded on Jul 6, 2021). Organic sales increased 16% year over year. Management highlighted that a higher pet population and more humanization and premiumization of pet food amid the pandemic are tailwinds for the company’s pet food category.
Is All Rosy for General Mills?
During third-quarter fiscal 2022, General Mills’ adjusted gross margin contracted 160 basis points (bps) to 31.4% due to input cost inflation, supply chain deleverage and escalated other costs of goods sold. Adjusted operating profit margin contracted 90 bps to 14.9%. The company is bearing the brunt of a volatile environment. It is battling transportation challenges and labor shortages. For fiscal 2022, management expects an 8-9% input cost inflation and major costs associated with supply chain disruptions.
That said, we believe that the aforementioned upsides are likely to help the Zacks Rank #3 (Hold) company tide over such hurdles and keep its growth story alive. GIS’s stock has gained 9.1% in the past three months compared with the industry’s 4.2% growth.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). PPC has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial year earnings per share (EPS) suggests growth of almost 43% from the year-ago reported number.
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 (Buy). MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Medifast’s current financial year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.
Sysco, which engages in the marketing and distributing of various food and related products, carries a Zacks Rank #2. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco’s current financial year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number.
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General Mills (GIS) Poised on Key Priorities & Pet Segment Sales
General Mills Inc. (GIS - Free Report) is benefiting from its focus on the Accelerate strategy and key priorities. The company’s solid Pet segment sales are a key driver. The branded consumer food company is committed to undertaking cost-control moves and pricing initiatives amid a rising inflationary environment.
Let’s delve deeper.
Image Source: Zacks Investment Research
Growth Initiatives on Track
General Mills is focused on its Accelerate strategy (unveiled in February 2021), which helps the company choose how to win and where to play to boost profitability and enhance shareholders’ returns. Under how to win, General Mills is focused on four pillars that are designed to provide a competitive advantage. These include brand building, undertaking innovations, unleashing scale and maintaining business strength. 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.
General Mills is on track with its three key priorities for fiscal 2022, which go in line with the Accelerate strategy. The company plans to continue competing effectively – which includes prioritizing core markets, local gem brands and global platforms alongside utilizing its innovation and brand-building capacities. The company is focused on undertaking cost control moves, including Holistic Margin Management (HMM) productivity program, Strategic Revenue Management (SRM) pricing initiatives and endeavors to counter input cost inflation and other cost woes. Thirdly, management is focused on actions related to reshaping the portfolio and the organization.
Recently, management inked a deal to offload its Helper main meals and Suddenly Salad side dishes businesses to Eagle Family Foods Group (which is a portfolio firm of Kelso & Company).This highlights the company’s focus on reshaping the portfolio and concentrating on areas with higher growth potential. In May 2022, GIS 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.
Pet Segment: Key Driver
Solid Pet segment sales are a key growth driver for General Mills. During the third quarter of fiscal 2022, revenues in the Pet Segment came in at $567.7 million, up 30% year over year on the back of solid volume growth and positive net price realization as well as mix. Net sales included 14 points of gains from the pet treats business buyout (concluded on Jul 6, 2021). Organic sales increased 16% year over year. Management highlighted that a higher pet population and more humanization and premiumization of pet food amid the pandemic are tailwinds for the company’s pet food category.
Is All Rosy for General Mills?
During third-quarter fiscal 2022, General Mills’ adjusted gross margin contracted 160 basis points (bps) to 31.4% due to input cost inflation, supply chain deleverage and escalated other costs of goods sold. Adjusted operating profit margin contracted 90 bps to 14.9%. The company is bearing the brunt of a volatile environment. It is battling transportation challenges and labor shortages. For fiscal 2022, management expects an 8-9% input cost inflation and major costs associated with supply chain disruptions.
That said, we believe that the aforementioned upsides are likely to help the Zacks Rank #3 (Hold) company tide over such hurdles and keep its growth story alive. GIS’s stock has gained 9.1% in the past three months compared with the industry’s 4.2% growth.
3 Solid Staple Stocks
Some better-ranked stocks are Pilgrim’s Pride (PPC - Free Report) , Medifast (MED - Free Report) and Sysco Corporation (SYY - Free Report) .
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). PPC has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial year earnings per share (EPS) suggests growth of almost 43% from the year-ago reported number.
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 (Buy). MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Medifast’s current financial year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.
Sysco, which engages in the marketing and distributing of various food and related products, carries a Zacks Rank #2. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco’s current financial year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number.