General Mills, Inc. GIS looks well-placed on the back of its three robust key priorities. Moreover, strength in the company’s Pet segment as well as focus on innovations bodes well. Also, its robust cost-saving efforts are yielding.
The company has been witnessing higher consumer demand, stemming from escalated at-home consumption and more cook-at-home amid the coronavirus pandemic. This got reflected in fourth-quarter fiscal 2020 results, with net sales increasing 21% year over year. Also, organic sales grew 16% in the quarter. Further, management anticipates net sales in fiscal 2021 to be favorably impacted by higher at-home demand for food compared with the pre-pandemic levels.
Moreover, analysts are optimistic about the company’s performance. The Zacks Consensus Estimate for its fiscal 2021 earnings inched up a cents to $3.54 per share in the past seven days. The upsides have boosted investors’ sentiments. Shares of the company have gained 18.7% so far this year against the industry’s decline of 9.2%.
What’s Narrating General Mills’ Growth Story?
General Mills is on track with its three key priorities for fiscal 2021. Firstly, the company expects to execute a “compete effectively, everywhere we play” policy. Through this practice, General Mills aims to enhance brand penetration, strengthen its consumer partnerships and increase competitive service levels. Also, management expects to gain market share for some of its key categories via the strategy. Moreover, General Mills is on track with optimizing its efficiency to enhance investments. Management expects to reduce net-debt-to-adjusted-EBITDA ratio in fiscal 2021.
Further, General Mills is especially gaining from its Pet segment, which includes Blue Buffalo Pet Products (acquired in fiscal 2018). Following the acquisition, the company became one of the leading players in the pet food arena. In the fiscal fourth quarter, General Mills witnessed sales growth in the Pet segment. Revenues in the segment were up 37% year over year on the back of solid volume growth. Also, the segment results include an additional month.
The company focuses on maintaining a steady product pipeline to boost sales momentum and capture market share. With evolving consumer food preferences, General Mills is investing in consumer-focused innovation and marketing, and accelerating the natural and organic product portfolio to boost its sales. In this respect, the company expects to reap continued benefits from Annie’s, General Mills’ biggest natural and organic brand. Other noteworthy brands included in the category are Bunny Grahams, Muir Glen and EPIC. The natural products platform is likely to continue expanding in the forthcoming periods.
The coronavirus pandemic marred the company’s Convenience Stores & Foodservice. Also, General Mills’ Asia & Latin America business has been witnessing challenges amid the pandemic.
Nevertheless, General Mills’ aforementioned upsides together with its cost-saving endeavors are likely to help this Zacks Rank #2 (Buy) company remain in investors’ good books.
Notably, the company is currently pursuing many initiatives focused on improving operational efficiency to generate cost savings and support its key growth strategies. It expects to achieve cost savings through increased efficiency, reduced complexity through SKU optimization, further supply-chain optimization and continued expansion of zero-based budgeting across the business, which will result in accelerated margin expansion. Also, the company remains on track with its Holistic Margin Management (“HMM”), which is expected to continue generating greater savings.
Other Top Picks
United Natural Foods, Inc. UNFI currently has an Earnings ESP of +10.00% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
B&G Foods BGS, with a Zacks Rank #1, currently has an Earnings ESP of +1.56%.
McCormick MKC has a long-term earnings growth rate of 5.8%and a Zacks Rank #2.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Mills, Inc. (GIS) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
McCormick Company, Incorporated (MKC) : Free Stock Analysis Report
BG Foods, Inc. (BGS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research