General Mills Inc. (NYSE: GIS) will report its Q1 2022 earnings on September 22, 2021.
What to look for
The company continues to execute its Accelerate strategy to offer competitive performance in the rapidly changing environment. Also, General Mills is navigating the evolving cist environment and leveraging its Strategic Revenue Management pricing initiatives, Holistic Margin Management programs, and efficiency programs to address cost headwinds and input cost inflation. In addition, in July, the company finalized Tyson Foods' pet treats' acquisition and expects to finalize divesture of Yoplait operations by year-end.
Earnings: Stockearning’s Estimated EPS is expected to be above $0.91 per share, which the company reported at the end of fiscal Q4 2021. Historical EPS Performance for the past 12 quarters shows the company has topped estimates 11 times (91%) and missed once (8%). In Q4 2021, the company's EPS of $0.9 beat estimates of $0.83 per share. The company expects constant currency-adjusted EPS to be flat down 2% because of the impact of pet-treats acquisitions that could add around $0.02 per share to FY2022 adjusted EPS.
Revenue: In Q4 2021, net sales were up 21% to $5 billion, while organic sales grew 16%, attributed to an increase in at–home demand due to the pandemic. The company reported net sales of $17.6 billion for the full year, a 5% YoY increase, while organic sales grew 4% YoY.
Stock movement: Since the last earnings release, General Mills' stock price has lost 1.8% from $60.03 at last earnings to the previous close of $58.92. Following the earnings release, GIS stock has been UP 23 times in the previous 46 quarters. So, the historical stock price reaction suggests a 50% probability of the share price going up once the company releases its Q1 2022 earnings.
What analysts are saying
Credit Suisse analyst Robert Moskow downgraded the stock from "Buy" to "Hold" with a target price of $63 from $68. The analyst considers General Mills "relatively advanataged" compared to rivals but expects risk to the back-half of the company's fiscal year. The analyst told investors in a note that the management has called out delays from suppliers, labor inflation, and cost efficiency efforts to mitigate high costs on its primary business. Moskow predicts that this could result in “another pricing lag and more margin compensation,” in 2H of fiscal 2022 when the company hedge roll over and the expected effect of inflation comes through.
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