Investing

Can General Mills Serve Up More Tasty Earnings?

Paul Ausick

Published: June 26, 2023 10:01 am

This year’s second calendar quarter ends this week with seven notable earnings reports on tap. Two Dow Jones industrials, a major chipmaker and the largest U.S.-based alcoholic beverage seller will be reporting quarterly results this week.

Before U.S. markets opened on Monday, Carnival reported a smaller-than-expected adjusted loss of $0.31 per share on revenue of $4.9 billion, also above the Wall Street consensus estimate of $4.8 billion. Despite upbeat projections for the rest of fiscal 2023 , the stock traded down nearly 9% shortly after the opening bell.

Before markets open on Tuesday, Dow component Walgreens will report quarterly results, and major consumer staples company General Mills Inc. (NYSE: GIS) is expected to report earnings Wednesday morning.

Shares of the food products giant have added nearly 18% over the past 12 months, significantly more than the 8% gain posted by the Consumer Staples Select Sector SPDR Fund (NYSE: XLP). General Mills stock has traded down by about 1% over the past three months, trailing XLP’s gain of about 3.2%.

Earlier this month, at a Deutsche Bank global consumer conference in Paris, CEO Jeffrey Harmening said General Mills is regaining momentum in productivity now that the supply chain snarls are being unraveled. Profits have topped estimates for five consecutive quarters, and Wall Street expects that string to continue when the company reports results before U.S. markets open on Wednesday.

Despite its strong performance, sentiment on the stock remains muted. Of 20 analysts covering the shares, 11 have a Hold rating and only four rate the stock at Buy or Strong Buy. It currently trades at around $81.30, implying an upside potential of 3.3% based on the median price target of $84.00. At the high target of $97.00, the implied upside is 19.3%.

Fiscal fourth-quarter revenue is forecast at $5.17 billion, which would be up 1.0% sequentially and by about 5.7% year over year. Adjusted EPS are forecast at $1.06, up 9.7% sequentially but 5.4% lower year over year. The current estimates for the 2023 fiscal year that ended in May call for EPS of $4.24, up 7.7%, on sales of $20.23 billion, up about 6.5%.

General Mills stock trades at 19.2 times expected 2023 EPS, 18.1 times estimated 2024 earnings of $4.49 and 17.1 times estimated 2025 earnings of $4.77 per share. Its 52-week trading range is $68.82 to $90.89. General Mills pays an annual dividend of $2.16 (yield of 2.66%). Total shareholder return for the past year was 21.07%.