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General Mills (GIS) Up on Raised View, Accelerate Strategy
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General Mills, Inc. (GIS - Free Report) has been consistently focused on its Accelerate strategy to generate profitable growth and deliver top-tier shareholder returns. The branded consumer foods company highlighted its advancements in the Accelerate strategy at the Consumer Analyst Group of New York 2023 Conference, wherein it also raised its guidance for fiscal 2023.
The announcement drove investors’ sentiments as shares of this Zacks Rank #2 (Buy) company jumped 4.4% on Feb 21. General Mills has rallied 19.4% in the past year compared to the industry’s decline of 0.9%.
Raised Guidance
Organic sales for fiscal 2023 are now anticipated to grow nearly 10%, up from the 8.2% growth projected during the company’s second-quarter fiscal 2023 earnings call. Management expects adjusted operating profit growth of 6-7% at constant currency or cc compared with the earlier view of a 3-5% increase.
Adjusted earnings per share (EPS) are envisioned to increase 7-8% at cc in comparison with the 4-6% increase projected before. Apart from this, General Mills expects free cash flow conversion of at least 90 percent of adjusted after-tax earnings.
Image Source: Zacks Investment Research
Accelerate Strategy Holds Promise
GIS’ Accelerate strategy was unveiled in February 2021, and it aids the company in making the choices of how to win and where to play to boost profitability while enhancing shareholder returns in the long run. Under how to win, General Mills is focused 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, along with portfolio restructuring. This includes prioritizing investments, investing in five Global Platforms, driving growth in Local Gem brands and reshaping the portfolio.
For fiscal 2023, GIS remains committed to the Accelerate strategy, underscored by its three priorities — competing efficiently through brand building, investing in Holistic Margin Management (“HMM”) and Strategic Revenue Management initiatives to counter inflation, making other strategic business investments, staying committed to ESG goals and reshaping the portfolio. It expects HMM cost savings of 3-4% of the cost of goods sold in fiscal 2023.
For reshaping the portfolio, management announced or concluded seven transactions in fiscal 2022, which include two buyouts and five divestitures. These are aimed at driving growth in the long run.
In June 2022, General Mills acquired TNT Crust – a manufacturer of high-quality frozen pizza crusts. The company had concluded the acquisition of Tyson Foods’ pet treats business on Jul 6, 2021. The acquisition bodes well amid growing pet-food category trends stemming from the humanization of pets, especially since the pandemic.
Meanwhile, GIS concluded the sale of its Helper main meals and Suddenly Salad side dishes businesses to Eagle Family Foods Group in July 2022. In the third quarter of fiscal 2022, the company closed the sale of its European yogurt business.
Also, in fiscal 2022, General Mills closed three different deals to offload its dough businesses in the Israel and European markets. These divestitures put the company a step closer to achieving the Accelerate strategy priorities.
Thus, General Mills remains well-placed for growth due to the strength of its Accelerate strategy.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 34.8%, on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 111.3% from the year-ago reported number.
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General Mills (GIS) Up on Raised View, Accelerate Strategy
General Mills, Inc. (GIS - Free Report) has been consistently focused on its Accelerate strategy to generate profitable growth and deliver top-tier shareholder returns. The branded consumer foods company highlighted its advancements in the Accelerate strategy at the Consumer Analyst Group of New York 2023 Conference, wherein it also raised its guidance for fiscal 2023.
The announcement drove investors’ sentiments as shares of this Zacks Rank #2 (Buy) company jumped 4.4% on Feb 21. General Mills has rallied 19.4% in the past year compared to the industry’s decline of 0.9%.
Raised Guidance
Organic sales for fiscal 2023 are now anticipated to grow nearly 10%, up from the 8.2% growth projected during the company’s second-quarter fiscal 2023 earnings call. Management expects adjusted operating profit growth of 6-7% at constant currency or cc compared with the earlier view of a 3-5% increase.
Adjusted earnings per share (EPS) are envisioned to increase 7-8% at cc in comparison with the 4-6% increase projected before. Apart from this, General Mills expects free cash flow conversion of at least 90 percent of adjusted after-tax earnings.
Image Source: Zacks Investment Research
Accelerate Strategy Holds Promise
GIS’ Accelerate strategy was unveiled in February 2021, and it aids the company in making the choices of how to win and where to play to boost profitability while enhancing shareholder returns in the long run. Under how to win, General Mills is focused 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, along with portfolio restructuring. This includes prioritizing investments, investing in five Global Platforms, driving growth in Local Gem brands and reshaping the portfolio.
For fiscal 2023, GIS remains committed to the Accelerate strategy, underscored by its three priorities — competing efficiently through brand building, investing in Holistic Margin Management (“HMM”) and Strategic Revenue Management initiatives to counter inflation, making other strategic business investments, staying committed to ESG goals and reshaping the portfolio. It expects HMM cost savings of 3-4% of the cost of goods sold in fiscal 2023.
For reshaping the portfolio, management announced or concluded seven transactions in fiscal 2022, which include two buyouts and five divestitures. These are aimed at driving growth in the long run.
In June 2022, General Mills acquired TNT Crust – a manufacturer of high-quality frozen pizza crusts. The company had concluded the acquisition of Tyson Foods’ pet treats business on Jul 6, 2021. The acquisition bodes well amid growing pet-food category trends stemming from the humanization of pets, especially since the pandemic.
Meanwhile, GIS concluded the sale of its Helper main meals and Suddenly Salad side dishes businesses to Eagle Family Foods Group in July 2022. In the third quarter of fiscal 2022, the company closed the sale of its European yogurt business.
Also, in fiscal 2022, General Mills closed three different deals to offload its dough businesses in the Israel and European markets. These divestitures put the company a step closer to achieving the Accelerate strategy priorities.
Thus, General Mills remains well-placed for growth due to the strength of its Accelerate strategy.
Other Food Stocks Worth a Look
Some other top-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Post Holdings (POST - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 34.8%, on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 111.3% from the year-ago reported number.