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General Mills (GIS) Gains From Business Strength Amid Risks
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General Mills, Inc. (GIS - Free Report) is well-poised for growth, courtesy of strength in its businesses, growth strategy, strategic acquisitions and robust marketing initiatives. However, escalating operating expenses and a high debt level are concerning.
The Zacks Rank #3 (Hold) company has a market capitalization of $44 billion and belongs to the Zacks Food - Miscellaneous industry.
Factors Influencing the Company’s Performance
General Mills is on track to prioritize core markets, global platforms and local brands, as well as reshaping its portfolio. The company has been executing its Accelerate strategy to drive sustainable, profitable growth and shareholder returns over the long run.
In fourth-quarter fiscal 2023, its revenues came in at $5,030 million, advancing 3% year over year. Organic net sales rose by 5% on strength in its North America Foodservice segment and favorable organic net price realization and mix.
For fiscal 2024, the company expects to witness organic net sales growth of 3-4%, driven by robust marketing, innovation and in-store support. Also, gains from net price realization through the company’s Strategic Revenue Management (“SRM”) initiative are likely to aid.
General Mills believes in strengthening its businesses through the addition of assets. Its acquisition of TNT Crust in fiscal 2023 has enhanced its product portfolio under the North America Foodservice segment. Also, in fiscal 2022, the company acquired Tyson Foods’ pet treats business for $1.2 billion. The buyout has strengthened its BLUE pet food portfolio and enhanced its position in the pet food market. This apart, with the buyout of Blue Buffalo Pet Products, GIS became one of the leading players in the pet food arena.
Strong cash flow generation capacity supports General Mills’ shareholder-friendly activities. In fiscal 2023, GIS rewarded its shareholders with a dividend payment of $1.3 billion and repurchased shares worth $1.4 billion. Also, in June 2023, the quarterly dividend rate was hiked by 9%.
However, General Mills has been grappling with inflationary pressure for a while now. In the fiscal fourth quarter, its cost of sales and selling, general and administrative expenses increased by 6% and 7%, respectively, year over year. Labor inflation continues to impact the costs of sourcing, manufacturing and logistics. Higher costs and expenses, if not controlled, might affect its margins and profitability in the upcoming quarters.
Image Source: Zacks Investment Research
In the past year, the company gained 0.3% compared with the industry’s growth of 4.9%.
Also, high debt levels can increase the company's financial obligations and prove detrimental to its profitability. For instance, the company exited fiscal 2023 with a long-term debt of $9,965.1 million, representing an increase of 22.4% on a sequential basis.
Key Picks
Some better-ranked stocks are Ingredion Incorporated (INGR - Free Report) , Celsius Holdings, Inc. (CELH - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) . INGR sports a Zacks Rank #1 (Strong Buy), and CELH and LW carry a Zacks Rank #2 (Buy).
Ingredion is a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions. The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise by 22.2% from the corresponding year-ago reported figure.
Celsius Holdings is a leading provider of functional drinks and liquid supplements in the United States. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 69.6% growth, while earnings per share are expected to increase by 154.4% from the corresponding year-ago reported figures.
Lamb Weston is engaged in producing and marketing value-added frozen potato products worldwide. The Zacks Consensus Estimate for LW’s current financial-year sales and earnings per share are expected to increase by 29.6% and 117.3%, respectively, from the year-ago reported figures.
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General Mills (GIS) Gains From Business Strength Amid Risks
General Mills, Inc. (GIS - Free Report) is well-poised for growth, courtesy of strength in its businesses, growth strategy, strategic acquisitions and robust marketing initiatives. However, escalating operating expenses and a high debt level are concerning.
The Zacks Rank #3 (Hold) company has a market capitalization of $44 billion and belongs to the Zacks Food - Miscellaneous industry.
Factors Influencing the Company’s Performance
General Mills is on track to prioritize core markets, global platforms and local brands, as well as reshaping its portfolio. The company has been executing its Accelerate strategy to drive sustainable, profitable growth and shareholder returns over the long run.
In fourth-quarter fiscal 2023, its revenues came in at $5,030 million, advancing 3% year over year. Organic net sales rose by 5% on strength in its North America Foodservice segment and favorable organic net price realization and mix.
For fiscal 2024, the company expects to witness organic net sales growth of 3-4%, driven by robust marketing, innovation and in-store support. Also, gains from net price realization through the company’s Strategic Revenue Management (“SRM”) initiative are likely to aid.
General Mills believes in strengthening its businesses through the addition of assets. Its acquisition of TNT Crust in fiscal 2023 has enhanced its product portfolio under the North America Foodservice segment. Also, in fiscal 2022, the company acquired Tyson Foods’ pet treats business for $1.2 billion. The buyout has strengthened its BLUE pet food portfolio and enhanced its position in the pet food market. This apart, with the buyout of Blue Buffalo Pet Products, GIS became one of the leading players in the pet food arena.
Strong cash flow generation capacity supports General Mills’ shareholder-friendly activities. In fiscal 2023, GIS rewarded its shareholders with a dividend payment of $1.3 billion and repurchased shares worth $1.4 billion. Also, in June 2023, the quarterly dividend rate was hiked by 9%.
However, General Mills has been grappling with inflationary pressure for a while now. In the fiscal fourth quarter, its cost of sales and selling, general and administrative expenses increased by 6% and 7%, respectively, year over year. Labor inflation continues to impact the costs of sourcing, manufacturing and logistics. Higher costs and expenses, if not controlled, might affect its margins and profitability in the upcoming quarters.
Image Source: Zacks Investment Research
In the past year, the company gained 0.3% compared with the industry’s growth of 4.9%.
Also, high debt levels can increase the company's financial obligations and prove detrimental to its profitability. For instance, the company exited fiscal 2023 with a long-term debt of $9,965.1 million, representing an increase of 22.4% on a sequential basis.
Key Picks
Some better-ranked stocks are Ingredion Incorporated (INGR - Free Report) , Celsius Holdings, Inc. (CELH - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) . INGR sports a Zacks Rank #1 (Strong Buy), and CELH and LW carry a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingredion is a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions. The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise by 22.2% from the corresponding year-ago reported figure.
Celsius Holdings is a leading provider of functional drinks and liquid supplements in the United States. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 69.6% growth, while earnings per share are expected to increase by 154.4% from the corresponding year-ago reported figures.
Lamb Weston is engaged in producing and marketing value-added frozen potato products worldwide. The Zacks Consensus Estimate for LW’s current financial-year sales and earnings per share are expected to increase by 29.6% and 117.3%, respectively, from the year-ago reported figures.