Will General Mills’ Q2 Results Be Full Of Lucky Charms?
Spreadex | Dec 18, 2018 11:56
A cereal killer has been let loose on the US stock in 2018. Opening at $59.60, it has had an absolute nightmare, and now sits at a current trading price of $36.74. That’s a 38% slump in just shy of 12 months, and its worst level in more than 7 years.
The firm’s most recent update came in mid-September, and sparked a 7.5% single session decline. Net sales were up 9% to $4.09 billion, missing analysts’ estimates of $4.12 billion, while organic net sales only saw a ‘modest’ increase year-on-year. Worryingly, net sales in the North America Retail segment fell 2%, with a 4% drop in US snacks and 2% slip in both US Yoghurt and US Meals & Baking.
What investors really took umbrage with, however, was the 160 basis points slide in its adjusted gross margins to 33.6%; like its peers, General Mills is struggling in the face of rising freight costs and higher input costs.
As for its full year outlook, the company is expecting organic net sales to be between flat and up 1%, though including the impact of the Blue Buffalo acquisition they’ll rise 9% to 10%. Constant-currency adjusted operating profit, meanwhile, is forecast to climb 6% to 9%, with constant-currency adjusted diluted EPS is set to be between flat and down 3% from a base of $3.11.
In terms of Wednesday, analysts are looking for earnings to slip from $0.82 to $0.81 y/y, alongside a 7% jump in revenue to $4.51 billion.
General Mills Inc (NYSE:GIS) has a consensus rating of ‘Hold’ alongside an average target price of $49.19.
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