It's been a good week for General Mills, Inc. (NYSE:GIS) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.3% to US$53.28. General Mills reported US$4.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.95 beat expectations, being 7.7% higher than what analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for General Mills from 16 analysts is for revenues of US$17.2b in 2020, which is a modest 2.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to reduce 3.1% to US$3.40 in the same period. Before this earnings report, analysts had been forecasting revenues of US$17.2b and earnings per share (EPS) of US$3.37 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of US$55.58, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic General Mills analyst has a price target of US$65.00 per share, while the most pessimistic values it at US$44.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await General Mills shareholders.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. One thing stands out from these estimates, which is that analysts are forecasting General Mills to grow faster in the future than it has in the past, with revenues expected to grow 2.5%. If achieved, this would be a much better result than the 1.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.9% per year. So it looks like General Mills is expected to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. The consensus price target held steady at US$55.58, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for General Mills going out to 2023, and you can see them free on our platform here..
You can also view our analysis of General Mills's balance sheet, and whether we think General Mills is carrying too much debt, for free on our platform here.
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