General Mills Rises 3.3% on Upbeat Q4 Guidance

General Mills (GIS) has delivered mixed results for the third quarter of Fiscal 2022 (ended February 27), as earnings surpassed but revenue missed estimates. However, shares of the company rose 3.3% in Wednesday’s early trade on the back of upbeat fourth-quarter guidance.

General Mills is a multinational manufacturer of branded consumer foods sold through retail stores. It deals in convenient meals, ready-to-eat cereals, snacks, and super-premium ice-creams, among others.

Q3 Results

Net sales in the quarter remained stable year-over-year at $4.5 billion, slightly lagging consensus estimates of $4.56 billion. Organic net sales increased 4%. Net earnings attributable to General Mills rose 11% to $660 million, reflecting lower net interest expense.

Consequently, General Mills delivered adjusted diluted EPS of $0.84, up 2% in constant currency terms and beating consensus estimates of $0.79 per share. The rise was mostly driven by lower net interest expense and higher after-tax earnings from joint ventures. 

Fiscal 2022 Outlook

Organic sales are expected to increase 5%, including an expectation for organic net price realization and mix to increase sequentially from the third quarter to the fourth quarter. Earlier, the company had expected net sales to rise in the range of 4% to 5%.

Adjusted diluted EPS is expected to remain flat or rise 2%on the back of the higher outlook on adjusted operating profit. The company had earlier expected its EPS between down 2% and up 1%.

GIS expects the net impact of divestitures, acquisitions, and foreign currency exchange to reduce full-year reported net sales growth by 1%. Further, it sees foreign currency exchange not having any material impact on adjusted operating profit growth or adjusted diluted EPS growth.

Stock Rating

Consensus among analysts is a Hold based on one Buy, six Holds and one Sell. The average General Mills stock price target of $65.50 implies 4.5% upside potential to current levels.

Insider Trading Activity

TipRanks’ Insider Trading Activity tool shows that confidence in General Mills is currently Very Negative based on informative transactions by seven insiders over the past three months. Corporate Insiders have sold shares worth $11.5 million over this period.

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