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General Mills (GIS) Queued for Q3 Earnings: Factors to Watch

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General Mills, Inc. GIS is likely to witness increases in the top and bottom lines when it reports third-quarter fiscal 2021 numbers on Mar 24. The Zacks Consensus Estimate for earnings has increased a cent over the past 30 days to 85 cents per share, which indicates a rise of 10.4% from the figure reported in the prior-year period. This manufacturer and marketer of branded consumer foods has a trailing four-quarter earnings surprise of 7.7%, on average.

The Zacks Consensus Estimate for revenues is pegged at $4,448 million, suggesting an improvement of 6.4% from the prior-year quarter’s reported figure.

General Mills, Inc. Price, Consensus and EPS Surprise

General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. Price, Consensus and EPS Surprise

General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote

Key Factors to Note

The company has been gaining on increased demand stemming from the pandemic-led higher at-home consumption. On its second-quarter earnings call, management said that it anticipates consumer demand for food at home to remain high compared with pre-pandemic levels for the rest of fiscal 2021. General Mills envisions solid top and bottom-line growth in the third quarter of fiscal 2021. Organic net sales growth in the quarter under review is likely to be in line with second-quarter levels.

Notably, General Mills has been on track with its three core priorities for fiscal 2021, which include competing efficiently, boosting efficiency to fuel investments and reducing leverage. With regard to its efficiently competing priority, the company has driven broad-based market share gains that include holding or growing market share in five out of its six largest markets in the first half of fiscal 2021. As part of efficiency boosting, the company is on track with its Holistic Margin Management (HMM) and Strategic Revenue Management (SRM) initiatives. Also, benefits from volume leverage are yielding results.

Apart from these, General Mills is focused on consumer-friendly innovation to drive growth. Incidentally, the company successfully completed the launch of various products like Cinnamon Cheerios, convenient new Progresso Toppers and Nature Valley Packed sustained energy bars during the first half of fiscal 2021. Moreover, management is optimistic about its innovation lineup for the second half of fiscal 2021. Additionally, General Mills recently unveiled its “Accelerate” strategy to drive growth. The strategy is outlined to aid the company in making choices of how to win and where to play with an aim to boost profitability while enhancing shareholder returns in the long run.

However, sales in the company’s Convenience Stores & Foodservice segment have been declining for a while now due to pandemic-related headwinds. During second-quarter fiscal 2021, organic net sales in the segment dropped 14% due to lower demand for away-from-home food amid the coronavirus outbreak. Reduced consumer traffic and other pandemic-induced restrictions adversely impacted the segment’s major away-from-home channels like restaurants, schools, lodging and convenience stores. Apart from this, the company has been witnessing higher SG&A expenses for quite some time now. Also, it has been incurring coronavirus-related costs like health, safety and expenses associated with catering to higher demand levels.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for General Mills this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

General Mills currently has a Zacks Rank #3 and an Earnings ESP of -0.84%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Hillenbrand HI has an Earnings ESP of +2.73% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Estee Lauder Companies EL has an Earnings ESP of +15.26% and a Zacks Rank #2.

Philip Morris PM has an Earnings ESP of +0.36% and a Zacks Rank #3.

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