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Buy General Mills (GIS) Stock Ahead of Q4 Earnings?

Zachary Stutler

General Mills GIS will report its Q4 and fiscal 2019 earnings results before the market opens on Wednesday, June 26. The company’s stock price hit a 52-week high on Thursday of $54.19. The stock then surged again Friday to hit its yet another new high of $54.39.

YTD, General Mills’ stock is up over 37%, including a 5.8% climb since the start of June. After hitting its 52-week low in December, General Mills’ stock has had solid growth and has only had one significant slip. On May 29, Goldman Sachs GS downgraded the stock from “neutral” to “sell,” which caused the stock to plummet. But since that point, the stock has rallied and has a lot of momentum right now.

Expectations

Fiscal 2019 and 2020 estimates for General Mills’ earnings have trended completely in the right direction with 3 upward revisions and 0 downward revisions over the past 60 days. Our Zacks Consensus Estimates call for Q4’s adjusted earnings to fall 3.8%, but revenue is expected to jump 8.75% year over year. This expected growth brings predicted revenue to $4.23 billion compared to $4.20 billion last quarter. Expected EPS is $0.76, down slightly from last quarter’s EPS of $0.83.

Meanwhile, General Mills’ full-year fiscal 2019 earnings are projected to grow by 1.29%, bringing expected EPS to $3.15 for the year. Looking further ahead, fiscal 2020 earnings are expected to grow 6.23% on the back of 2.4% revenue growth over their respective fiscal 2019 estimates.

Revenue growth for Q4 is expected to be bolstered by last year’s acquisition of Blue Buffalo. The nation’s largest pet food brand added an additional revenue stream to General Mills’ portfolio and that revenue source is expected to continue paying off.

Outlook

General Mills has outperformed the S&P 500 for most of 2019, which looks especially good compared to its industry. Overall investor confidence is clearly quite high at the moment with the S&P at an all-time high. This combination of positivity and expected future growth could help the GIS stock continue to climb leading up to its earnings release. And an impressive earnings report or strong guidance could provide an additional boost to the stock.

General Mills has beat earnings expectations the past 5 quarters. Last quarter, GIS beat our bottom-line estimate by 20%. With that being said, it is important to mention that buying a stock prior to its earnings report carries a higher level of risk as a ‘bad’ report and or lower-than-projected guidance could send the stock down in the near-term.

General Mills’ stock opened Monday trading down less than a percent.

General Mills is currently a Zacks Rank #2 (Buy).

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