General Mills, Inc. GIS is preparing to unveil its third-quarter fiscal 2024 earnings on Mar 20. Expectations hint at a 3.4% decline in revenues, with the Zacks Consensus Estimate pegged at $4.95 billion, as compared to the previous year’s figure.
The forecast for quarterly earnings stands at $1.04 per share, indicating a 7.2% increase from the corresponding figure of the previous year. Over the last four quarters, GIS has exceeded expectations by 5.7%, on average.
Key Considerations
General Mills maintains dominance through its robust brand portfolio, encompassing enduring favorites like Pillsbury, Totino’s, Betty Crocker, and Old El Paso. Leveraging brand strength, accumulated over years of marketing and innovation, provides GIS with a competitive edge. The company capitalizes on this strength through pricing actions and mix optimization, ensuring consistent annualized net sales growth.
Performance and Resilience
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
The company’s ability to enhance profitability in fiscal 2023, despite high input cost inflation, underscores its pricing potency. GIS’s brand resilience aids in maintaining volumes amid industry challenges. Market leadership and pricing power of GIS’s brands likely contributed positively to the upcoming quarter’s performance. Projections suggest a 2.3% increase in price/mix for the third quarter.
General Mills’ commitment to its Accelerate strategy manifests in key priorities: efficient competition through brand innovation, supply chain optimization through cost savings, disciplined capital allocation, and continuous portfolio reshaping via strategic acquisitions and divestitures. These efforts are expected to bolster the company’s performance in the review quarter.
On the flip side, the Pet segment’s sales have shown a downward trend over recent quarters. Economic conditions within the United States have impacted premium pet food sales, with consumers leaning towards more budget-friendly options, causing a 4% dip in segment revenue in the previous quarter. Changing channel dynamics pose additional challenges, with the Pet Retail channel experiencing a double-digit decline in retail sales, creating a hurdle for the upcoming quarter. Models predict a 9% revenue decline for the Pet segment in Q3.
General Mills continues to face margin pressure from escalating production costs, with an estimated 5% inflation rate in fiscal 2024 leading to higher cost of sales. While a moderation from the previous year is anticipated, these rising expenses continue to compress profit margins.
Insight from Zacks Model
Zacks’ model foresees a potential earnings beat for General Mills in the forthcoming release. The confluence of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) enhances the likelihood of surpassing earnings estimates, an outlook that seems promising this time around.
General Mills boasts an Earnings ESP of +1.30% alongside a Zacks Rank #3. Investing enthusiasts can explore top-performing stocks pre-earnings disclosure using our Earnings ESP Filter.
Others in the Race
Apart from General Mills, three other entities exhibit a similar potential for surpassing earnings projections:
The Hershey Company HSY, with an Earnings ESP of +0.72% and a Zacks Rank #3, is anticipated to observe a revenue increase in the upcoming quarter. Projections place Hershey’s quarterly revenue at $3.12 billion, reflecting a 4.3% rise over the previous year. The company has achieved a trailing four-quarter earnings surprise averaging 6.5%.
Newell Brands NWL presents an Earnings ESP of +10.71% combined with a Zacks Rank #3. The company’s first-quarter 2024 numbers are expected to showcase a drop in top and bottom lines, with a projected revenue decline of 8.9%. While the Zacks Consensus Estimate indicates a loss of 7 cents per share, Newell Brands has a trailing four-quarter earnings surprise averaging 33.4%.
Service Corporation SCI holds an Earnings ESP of +1.53% and a Zacks Rank of 3. The company is likely to experience declines in top and bottom lines in its first-quarter 2024 results. The Zacks Consensus Estimate sets Service Corporation’s quarterly revenues at $1.01 billion, signifying a 1.5% dip from the previous year. SCI has recorded a trailing four-quarter earnings surprise averaging 6.3%.
For more information on upcoming earnings announcements, refer to the Zacks Earnings Calendar.
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Review Newell Brands Inc.’s (NWL) Free Stock Analysis Report
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The insights shared in this article are those of the author and do not necessarily represent the views of Nasdaq, Inc.
