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General Mills (GIS) Up More Than 10% in 3 Months: Here's Why
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General Mills, Inc. (GIS - Free Report) has carved out a strong niche in the food industry, leveraging the power of its brands, effective pricing strategies and dedicated focus on its Accelerate strategy. Through pricing actions and mix optimization, the company has delivered steady annualized net sales growth over fiscal 2018-2023.
Shares of the company have rallied 13.4% in the past three months compared with the industry’s growth of 5.1%
Factors Working Well
General Mills owns many brands with leading market share positions in their categories. Brands like Pillsbury, Totino's, Betty Crocker and Old El Paso boast strong market share in baked goods, pizza, baking mixes and Mexican food categories, respectively. Many of these brands command strong consumer loyalty and affinity built over the years through marketing and innovation. This grants General Mills more pricing flexibility than less established competitors.
The company is fully committed to its “Accelerate Strategy” set in motion in early 2021 to hone business focus and elevate profitability over time. For fiscal 2024, this multi-year strategy centers on three priorities. These include enhancing competitive edge through impactful brand development, fostering innovation and utilizing the company’s strengths to succeed in an evolving consumer landscape.
Image Source: Zacks Investment Research
Further, management is dedicated to enhancing supply chain efficiency, emphasizing Holistic Margin Management (“HMM”) savings and mitigating costs associated with disruptions in the supply chain. Additionally, the company is committed to prudent capital allocation, which involves investing in operations, providing robust returns to shareholders and ensuring balance sheet flexibility for potential portfolio-reshaping actions.
The 'Accelerate' strategy is designed to maximize General Mills' extensive scale, enhance operational efficiency and boost returns for shareholders. This positions the company not only for current resilience but also for sustained growth over the long term.
Will Cost Woes be Countered?
General Mills faces ongoing margin pressure from rising production costs. Although offset by the price/mix and HMM cost savings, the adjusted gross margin in the third quarter of fiscal 2024 was partly hurt by input cost inflation, increased other supply chain costs and supply chain deleverage. Management anticipates continued input cost inflation on its cost of goods sold during the fourth quarter. Though moderating from the last year, these increasing costs remain a hindrance to profit margins.
That said, General Mills has shown an ability to effectively manage costs, even in a challenging environment. The company is on track to deliver HMM cost savings of 5% in fiscal 2024, which is higher than the year-ago period. During fiscal 2024, adjusted operating profit growth at constant currency (cc) is anticipated at 4-5%. Management expects adjusted EPS growth of 4% and 5% at cc.
General Mills has demonstrated resilience and strategic foresight in navigating the challenges of the food industry. With a focus on innovation, operational efficiency and shareholder value, this Zacks Rank #3 (Hold) company is poised to maintain its competitive edge and deliver sustained growth in the years ahead.
Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Tyson Foods (TSN - Free Report) , Hormel Foods (HRL - Free Report) and The J.M. Smucker (SJM - Free Report)
Tyson Foods, which operates through the Beef, Pork, Chicken and Prepared Foods segments, currently carries a Zacks Rank #2 (Buy). TSN delivered a positive earnings surprise of 24.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year earnings calls for growth of 76.1% from the year-ago reported numbers.
Hormel Foods develops, processes and distributes various meat, nuts and other food products. It currently carries a Zacks Rank #2. HRL has a trailing four-quarter earnings surprise of 3.5%, on average.
The Zacks Consensus Estimate for Hormel Foods’ current financial-year sales suggests growth of 1.2% from the year-ago reported number.
The J.M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank #2. SJM has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current financial-year earnings implies growth of 7.6% from the year-ago reported number.
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General Mills (GIS) Up More Than 10% in 3 Months: Here's Why
General Mills, Inc. (GIS - Free Report) has carved out a strong niche in the food industry, leveraging the power of its brands, effective pricing strategies and dedicated focus on its Accelerate strategy. Through pricing actions and mix optimization, the company has delivered steady annualized net sales growth over fiscal 2018-2023.
Shares of the company have rallied 13.4% in the past three months compared with the industry’s growth of 5.1%
Factors Working Well
General Mills owns many brands with leading market share positions in their categories. Brands like Pillsbury, Totino's, Betty Crocker and Old El Paso boast strong market share in baked goods, pizza, baking mixes and Mexican food categories, respectively. Many of these brands command strong consumer loyalty and affinity built over the years through marketing and innovation. This grants General Mills more pricing flexibility than less established competitors.
The company is fully committed to its “Accelerate Strategy” set in motion in early 2021 to hone business focus and elevate profitability over time. For fiscal 2024, this multi-year strategy centers on three priorities. These include enhancing competitive edge through impactful brand development, fostering innovation and utilizing the company’s strengths to succeed in an evolving consumer landscape.
Image Source: Zacks Investment Research
Further, management is dedicated to enhancing supply chain efficiency, emphasizing Holistic Margin Management (“HMM”) savings and mitigating costs associated with disruptions in the supply chain. Additionally, the company is committed to prudent capital allocation, which involves investing in operations, providing robust returns to shareholders and ensuring balance sheet flexibility for potential portfolio-reshaping actions.
The 'Accelerate' strategy is designed to maximize General Mills' extensive scale, enhance operational efficiency and boost returns for shareholders. This positions the company not only for current resilience but also for sustained growth over the long term.
Will Cost Woes be Countered?
General Mills faces ongoing margin pressure from rising production costs. Although offset by the price/mix and HMM cost savings, the adjusted gross margin in the third quarter of fiscal 2024 was partly hurt by input cost inflation, increased other supply chain costs and supply chain deleverage. Management anticipates continued input cost inflation on its cost of goods sold during the fourth quarter. Though moderating from the last year, these increasing costs remain a hindrance to profit margins.
That said, General Mills has shown an ability to effectively manage costs, even in a challenging environment. The company is on track to deliver HMM cost savings of 5% in fiscal 2024, which is higher than the year-ago period. During fiscal 2024, adjusted operating profit growth at constant currency (cc) is anticipated at 4-5%. Management expects adjusted EPS growth of 4% and 5% at cc.
General Mills has demonstrated resilience and strategic foresight in navigating the challenges of the food industry. With a focus on innovation, operational efficiency and shareholder value, this Zacks Rank #3 (Hold) company is poised to maintain its competitive edge and deliver sustained growth in the years ahead.
Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Tyson Foods (TSN - Free Report) , Hormel Foods (HRL - Free Report) and The J.M. Smucker (SJM - Free Report)
Tyson Foods, which operates through the Beef, Pork, Chicken and Prepared Foods segments, currently carries a Zacks Rank #2 (Buy). TSN delivered a positive earnings surprise of 24.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year earnings calls for growth of 76.1% from the year-ago reported numbers.
Hormel Foods develops, processes and distributes various meat, nuts and other food products. It currently carries a Zacks Rank #2. HRL has a trailing four-quarter earnings surprise of 3.5%, on average.
The Zacks Consensus Estimate for Hormel Foods’ current financial-year sales suggests growth of 1.2% from the year-ago reported number.
The J.M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank #2. SJM has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current financial-year earnings implies growth of 7.6% from the year-ago reported number.