General Mills Delivers Mixed Q2 Results; Updates Guidance


This article was originally published on TipRanks.com

General Mills (GIS) delivered mixed Fiscal Q2 2022 results characterized by an earnings miss and a revenue beat. The company faced an unprecedented combination of high input cost inflation and supply-chain disruptions during the quarter. GIS shares fell 4.03% to close at $65.06 on December 21.

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.

Q2 Results

Net sales in the quarter were up 6% year-over-year to $5 billion, beating consensus estimates of $4.81 billion. Organic net sales increased 5%. Net earnings attributable to General Mills fell 13% to $597 million, reflecting lower operating profit.

Consequently, General Mills delivered adjusted diluted EPS of $0.99, down 7% in constant currency terms and missing consensus estimates of $1.04. The decline was mostly driven by lower operating profit, which landed at $800 million, 13% down year-over-year.

General Mills increased its dividend payout by 1% to $623 million for the six months ended November 28, 2021, and repurchased approximately 6.2 million shares of common stock.¬†GIS’ dividend yield¬†currently stands at 3.01%. Its next ex-dividend date is January 7, 2022.

Outlook

Following the mixed results, General Mills confirmed it is executing its Accelerate strategy. The company is looking to achieve sustainable and profitable growth. The strategy will create competitive advantages, build brands, and innovate.

The company has since updated its Fiscal 2022 guidance to reflect top-line growth and higher input costs. Organic sales are expected to increase 4% to 5% due to strong performances in the first and second quarters. Adjusted diluted EPS is expected to range between -2% and 1%.

Stock Rating

Last week, J.P. Morgan analyst Ken Goodman reiterated a Hold rating and raised the GIS price target to $67 from $62, implying 2.98% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 3 Buys and 5 Holds. The average General Mills stock price target of $67.88 implies 4.33% upside potential to current levels.

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