We expect consumer food giant, General Mills Inc. (GIS) to beat expectations when it reports third-quarter fiscal 2013 results on Mar 20 before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that General Mills is likely to beat earnings because it has the right combination of 2 key ingredients.
Positive Zacks ESP: Earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method), the difference between the Most Accurate Estimate of 58 cents and the Zacks Consensus Estimate of 57 cents, stands at +1.75%.
Zacks #3 Rank (Hold): General Mills currently carries a Zacks Rank # 3 (Hold). Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.
The combination of General Mills’ Zacks Rank #3 (Hold) and +1.75% ESP makes us confident of a positive earnings beat on Mar 20.
What is Driving the Better Than Expected Earnings?
Recent strategic acquisitions, better-than-expected sales and profits in the U.S. retail business, increased innovation and brand support, and productivity gains and cost savings are expected to boost earnings for General Mills. However, higher commodity inflation and a higher (than first half) tax rate may prove to be the headwinds.
Other Stocks to Consider
General Mills is not the only bullish firm this earnings season. We also see likely earnings beats coming from the following consumer staples companies:
Kraft Foods Group, Inc.(KRFT): Earnings ESP of +1.56% and Zacks Rank #2 (Buy).
The Hershey Company (HSY): Earnings ESP of +4.76% and Zacks Rank #2 (Buy).
The Chefs' Warehouse, Inc. (CHEF): Earnings ESP of +7.14% and Zacks Rank #3 (Hold).
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