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General Mills Gains 6% Since Q3 Results, Hits 52-Week High

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General Mills, Inc. (GIS - Free Report) touched a 52-week high of $51.17, before closing the session a tad lower at $51.09 on Mar 25. Also, shares of the company have been on a solid trajectory since it reported impressive third-quarter fiscal 2019 results last week. During the quarter, both the top and bottom line improved year over year and also surpassed the Zacks Consensus Estimate.

Additionally, management raised its EPS growth view for fiscal 2019, which spurred investors’ sentiments further. Markedly, the stock has gained approximately 6% since the announcement of its quarterly results. (Read: General Mills Beats on Q3 Earnings & Sales, Updates View)

We note that General Mills continues to benefit from buyouts, especially Blue Buffalo. Further, the company is on track with its Consumer First strategy and other cost-reduction initiatives. Backed by these factors, this Zacks Rank #2 (Buy) stock has rallied more than 30% in the past three months, crushing the industry’s 6.2% growth.

All said, let’s take a closer look at the aspects that are providing a boost to this Minneapolis, MN-based company’s performance.

Factors Narrating General Mills’ Growth Story

General Mills is focused on reshaping its portfolio via buyouts and divestitures. In April 2018, the company acquired Blue Buffalo Pet Products and is on track to integrate the same. Being one of the leading brands in the pet food category, Blue Buffalo helped the company to deliver solid top-line growth during the third quarter of fiscal 2019. The company continues to envision growth from this business in the forthcoming periods.

Encouragingly, management anticipates sales from Blue Buffalo and segment operating profit to grow at a significant pace in the fourth quarter, courtesy of distribution expansion in the Food, Drug and Mass (FDM) channel. Apart from this, the company is focused on improving its e-commerce channel given its rapid acceleration.

Further, General Mills is on track with its Consumer First strategy as well as key global growth strategies for consistent sales growth. To this end, the company is focused on solid innovations, efficient customer marketing and strong in-store execution to sharpen its competitive edge. In fact, its next main strategy focuses on driving growth across four differential global platforms, which include Haagen-Dazs ice cream, snack bars, Old El Paso Mexican food, and General Mills’ natural and organic food brands.

Also, General Mills is pursuing many initiatives focused on improving operational efficiency to generate cost savings and support its key growth strategies. In this regard, it is imperative to mention that the company remains on track with its Holistic Margin Management (HMM), which aided gross and operating margin expansions during the third quarter of fiscal 2019. In the fourth quarter of fiscal 2019, management expects increased savings from this program to aid margin expansion for Blue Buffalo. Additionally, management had earlier stated that it expects the cost of goods HMM savings of roughly $450 million in fiscal 2019.

Though management expects currency headwinds and input cost inflation to remain hurdles in fiscal 2019, we expect the aforementioned strategic endeavors to provide it with a solid ground for performing better in the days to come.

Other Key Picks

Medifast, Inc. (MED - Free Report) has a long-term earnings growth rate of 20% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sysco Corporation (SYY - Free Report) has a long-term earnings growth rate of 10.3% and a Zacks Rank #2.

United Natural Foods, Inc. (UNFI - Free Report) delivered average positive earnings surprise of 16.7% in the trailing four quarters. It has a long-term earnings growth rate of 7.4% and a Zacks Rank #2.

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