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What to Expect from General Mills's Fiscal 3Q17 Earnings

PART:
1 2 3 4 5 6
Part 4
What to Expect from General Mills's Fiscal 3Q17 Earnings PART 4 OF 6

Can GIS Outperform Analysts’ Earnings Estimates in Fiscal 3Q17?

EPS estimates

So far in this series, we’ve looked at General Mills’s (GIS) estimated revenues, sources of its revenues, and estimated EBITDA1 margins. In this part, we’ll take a look at analysts’ EPS (earnings per share) estimates.

Can GIS Outperform Analysts&#8217; Earnings Estimates in Fiscal 3Q17?

Can GIS Outperform Analysts&#8217; Earnings Estimates in Fiscal 3Q17?

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Fiscal 3Q17 estimates

Analysts expect General Mills (GIS) to post EPS of $0.71 in fiscal 3Q17, which represents 9.2% growth from $0.65 in fiscal 3Q16. The expansion of the company’s net margins and share repurchases are expected to overcome the negative effect of declining revenues, and the company could post growth in its fiscal 3Q17 EPS.

Since the beginning of fiscal 4Q16 until the end of fiscal 2Q17, General Mills has repurchased ~$1.4 billion in shares. These share repurchases reduced the number of outstanding shares, boosting the company’s EPS.

In the chart above, we can see that in the last four quarters, the company’s EPS has outperformed analyst estimates three times. Under these conditions, stock prices tend to rise.

Peer comparisons and outlook

During the same quarter, Kellogg (K), B&G Foods (BGS), and Pinnacle Foods (PF) posted EPS growth of 16.5%, -32.6%, and 12.9%, respectively.

In fiscal 2017, General Mills (GIS) expects its EPS to rise 5%–7% from $2.92 in fiscal 2016. Analysts expect the company to post EPS of $3.23 in the next four quarters, which indicates 9.9% growth from the corresponding quarters of the previous year.

Dividends

General Mills (GIS) paid $0.48 in dividends on January 6, 2017, taking the total for fiscal 2017 to $1.44. Analysts expect the company to pay $0.48 in dividends in fiscal 4Q17. The fiscal 4Q17 dividend payment takes the total for fiscal 2017 to $1.92, which represents 7.9% growth from $1.78 in the corresponding quarter in fiscal 2016.

Next, we’ll look at General Mills’s valuation multiple.

  1. earnings before interest, tax, depreciation, and amortization
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