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General Mills (GIS) Prioritizes Profit Amid Volume Challenges
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General Mills, Inc. (GIS - Free Report) , based in Minneapolis, MN, is gearing up to introduce a series of products across various segments, including cereals, yogurt, soup and snack categories. These innovations, coupled with strong brand-building efforts, are expected to drive market share growth and cater to evolving consumer preferences.
The company is maneuvering through a challenging market environment, with its prospects being a key interest for investors and stakeholders. Management is focused on maintaining consistent earnings and growth in the forthcoming quarters despite facing volume declines in segments, such as snacks and the pet business.
What Does the Future Hold?
GIS continues working to reinvigorate struggling brands like Progresso soup and Yoplait yogurt through innovation and more effective marketing. The company projects EPS growth of 4-5% for the remaining fiscal year, aided by accelerated productivity savings, lower incentive compensation and an aggressive stock buyback program, despite uncertainty around macroeconomic environment.
While the company faces a decline in sales volumes in certain areas, it expects this trend to stabilize in the upcoming quarters. With supply-chain conditions normalizing, management believes it can sustain a 4% rate of Holistic Margin Management savings going forward. Additional efforts to control costs include SKU rationalization and applying automation and AI technology in manufacturing. The company remains focused on earnings growth though it battles volume headwinds.
Image Source: Zacks Investment Research
Navigating Volume Growth Softness
The company is looking beyond its traditional offerings to explore new product lines and market segments aiming to tap into emerging consumer trends and preferences. This shift toward diversification aims to spark consumer interest and serves as a hedge against the volatility in specific product categories.
In addition to product diversification, General Mills is also placing a significant emphasis on enhancing operational efficiencies. This is being achieved through a continuous review and optimization of their product lines, ensuring that each segment contributes positively to overall business.
Moreover, the company is investing in technological advancements, particularly in areas like artificial intelligence, to streamline production processes. These technological integrations improve efficiency and contribute to cost savings, thus helping GIS maintain its profitability in a challenging volume growth environment. Through these concerted efforts in diversification and technological advancement, General Mills is strategically positioning itself to overcome the current volume growth softness and sustain its market position.
The Zacks Consensus Estimate of current-year sales suggests a decline of 1% from the year-ago levels. The consensus estimate for earnings indicates growth of 4.4% from the prior-year levels. However, we expect both the metrics to improve in the next fiscal year.
The Zacks Rank #3 (Hold) stock has fallen 13.7% in the past three months compared with the industry’s decline of 6.3%. Moreover, it has underperformed S&P 500’s growth by 6.8%. Despite the recent underperformance, investors can accumulate this stock due to its latent value potential versus the broader market's growth.
The Zacks Consensus Estimate for Ingredion’s current financial-year sales and earnings suggests growth of 5% and 22%, respectively, from the year-ago actuals.
BRF S.A. (BRFS - Free Report) , a Brazil-based food company focusing on the production and sale of poultry, pork, beef cuts, milk, dairy products and processed food products, carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings implies growth of 5.3% and 68% respectively, from the year-ago actuals.
Flowers Foods (FLO - Free Report) , which produces and markets packaged bakery food products in the United States, currently carries a Zacks Rank #2. FLO delivered an average earnings surprise of 6.8% in the trailing four quarters.
The Zacks Consensus Estimate Flowers Food’s current financial-year sales indicates growth of 6% from the year-ago reported figures.
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General Mills (GIS) Prioritizes Profit Amid Volume Challenges
General Mills, Inc. (GIS - Free Report) , based in Minneapolis, MN, is gearing up to introduce a series of products across various segments, including cereals, yogurt, soup and snack categories. These innovations, coupled with strong brand-building efforts, are expected to drive market share growth and cater to evolving consumer preferences.
The company is maneuvering through a challenging market environment, with its prospects being a key interest for investors and stakeholders. Management is focused on maintaining consistent earnings and growth in the forthcoming quarters despite facing volume declines in segments, such as snacks and the pet business.
What Does the Future Hold?
GIS continues working to reinvigorate struggling brands like Progresso soup and Yoplait yogurt through innovation and more effective marketing. The company projects EPS growth of 4-5% for the remaining fiscal year, aided by accelerated productivity savings, lower incentive compensation and an aggressive stock buyback program, despite uncertainty around macroeconomic environment.
While the company faces a decline in sales volumes in certain areas, it expects this trend to stabilize in the upcoming quarters. With supply-chain conditions normalizing, management believes it can sustain a 4% rate of Holistic Margin Management savings going forward. Additional efforts to control costs include SKU rationalization and applying automation and AI technology in manufacturing. The company remains focused on earnings growth though it battles volume headwinds.
Image Source: Zacks Investment Research
Navigating Volume Growth Softness
The company is looking beyond its traditional offerings to explore new product lines and market segments aiming to tap into emerging consumer trends and preferences. This shift toward diversification aims to spark consumer interest and serves as a hedge against the volatility in specific product categories.
In addition to product diversification, General Mills is also placing a significant emphasis on enhancing operational efficiencies. This is being achieved through a continuous review and optimization of their product lines, ensuring that each segment contributes positively to overall business.
Moreover, the company is investing in technological advancements, particularly in areas like artificial intelligence, to streamline production processes. These technological integrations improve efficiency and contribute to cost savings, thus helping GIS maintain its profitability in a challenging volume growth environment. Through these concerted efforts in diversification and technological advancement, General Mills is strategically positioning itself to overcome the current volume growth softness and sustain its market position.
The Zacks Consensus Estimate of current-year sales suggests a decline of 1% from the year-ago levels. The consensus estimate for earnings indicates growth of 4.4% from the prior-year levels. However, we expect both the metrics to improve in the next fiscal year.
The Zacks Rank #3 (Hold) stock has fallen 13.7% in the past three months compared with the industry’s decline of 6.3%. Moreover, it has underperformed S&P 500’s growth by 6.8%. Despite the recent underperformance, investors can accumulate this stock due to its latent value potential versus the broader market's growth.
Better-Ranked Stocks to Consider
Ingredion (INGR - Free Report) , an ingredients solutions provider specializing in nature-based sweeteners, starches, and nutrition ingredients, currently carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ingredion’s current financial-year sales and earnings suggests growth of 5% and 22%, respectively, from the year-ago actuals.
BRF S.A. (BRFS - Free Report) , a Brazil-based food company focusing on the production and sale of poultry, pork, beef cuts, milk, dairy products and processed food products, carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings implies growth of 5.3% and 68% respectively, from the year-ago actuals.
Flowers Foods (FLO - Free Report) , which produces and markets packaged bakery food products in the United States, currently carries a Zacks Rank #2. FLO delivered an average earnings surprise of 6.8% in the trailing four quarters.
The Zacks Consensus Estimate Flowers Food’s current financial-year sales indicates growth of 6% from the year-ago reported figures.