General Mills Posts Lower-Than-Expected 3Q Profit


Shares of General Mills dropped almost 4% in the pre-market session as the food company’s fiscal third-quarter (ended Feb. 28) earnings lagged analysts’ expectations. Meanwhile, better-than-expected sales for the quarter were reported.

General Mills’ (GIS) 3Q adjusted earnings increased 6% to $0.82 per share but missed Street estimates of $0.84 per share.

Net sales for the quarter grew 7% on a year-over-year basis to $4.52 billion and surpassed the consensus estimate of $4.45 billion. The performance was driven by higher demand for at-home food due to the pandemic.

The company’s adjusted gross margin was 33%, down 90 basis points. (See General Mills stock analysis on TipRanks)

General Mills CEO Jeff Harmening commented, “With our balance sheet in a strong position, we have resumed share repurchase activity in the fourth quarter. We’re continuing to advance our Accelerate strategy, including yesterday’s announcement of our proposed divestiture of our European Yoplait business.”

For the remainder of fiscal 2021, General Mills expects continued elevated consumer demand for at-home food due to the pandemic. It expects full-year organic net sales to increase by 3.5%.

Following the 3Q results, Jefferies analyst Robert Dickerson reiterated a Hold rating and a price target of $63 (3% upside potential) on the stock.

The rest of the Street is sidelined on the stock with a Hold consensus rating based on 1 Buy and 4 Holds. The average analyst price target of $61.20 implies that shares are almost fully valued at current levels. Shares have advanced 26.9% over the past year.

According to TipRanks’ Smart Score system, General Mills gets a 5 out of 10, which indicates that the stock is likely to perform in line with market averages.

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