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Here's Why General Mills Appears to be a Tempting Stock Now

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General Mills, Inc. (GIS - Free Report) , which is slated to release earnings toward the end of this month, looks like a worthwhile investment bet at the moment. The provider of branded consumer foods is well placed, courtesy of key global strategies for sales and solid cost-saving efforts. Notably, the Zacks Rank #2 (Buy) stock has rallied 9.6% in the past three months, outpacing the industry’s growth of 6.6%.

Let’s take a closer look.



Factors Working in General Mills’ Favor

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

Finally, the company is working toward reshaping its portfolio via buyouts and divestitures. In connection with this, General Mills took over Blue Buffalo Pet Products in April 2018, which is aiding revenue growth. The company anticipates sales from Blue Buffalo to grow at a brisk pace in the fourth quarter, thanks to distribution expansion in the Food, Drug and Mass channel. Apart from these, the company is decided on improving its e-commerce channel, given the rapid acceleration.

General Mills is also pursuing multiple initiatives to generate cost savings and improve operational efficiency. The company expects to cut down on costs through increased efficiency, reduced complexity (via SKU optimization), supply chain optimization and continued expansion of zero-based budgeting across the business. This is likely to result in accelerated margin expansion. Further, the company is on track with Holistic Margin Management (HMM), which is expected to generate greater savings this year. In fact, savings from this initiative aided gross and operating margin expansion during the third quarter of fiscal 2019.

Management expects better savings from this program to drive margin at Blue Buffalo in the fourth quarter of fiscal 2019. Also, management had earlier stated that it expects cost of goods HMM savings of roughly $450 million in fiscal 2019.

Together, these efforts are likely to guard the company against input cost inflation and costs related to additional growth investments in fiscal 2019.

Looking for More? Check These Food Stocks Now

Campbell Soup (CPB - Free Report) , with a Zacks Rank #2, has a long-term EPS growth rate of 6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Flowers Foods (FLO - Free Report) , also with a Zacks Rank #2, delivered positive earnings surprises in the last two quarters.

J&J Snack Foods (JJSF - Free Report) , with a Zacks Rank #2, also posted positive earnings surprises in the last two quarters.

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