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General Mills Misses 1Q18 Estimates, Stock Falls

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General Mills Misses 1Q18 Estimates, Stock Falls PART 1 OF 6

General Mills Misses Fiscal 1Q18 Estimates, Stock Falls

Sluggish fiscal 1Q18 performance

After General Mills (GIS) reported sluggish fiscal 1Q18 results, GIS stock fell 5.8% before closing at $52.17 on September 20, 2017. The company missed analysts’ estimates both on sales and EPS (earnings per share) as lower yogurt and cereal volumes took a toll on sales. Increased input costs, unfavorable mix, and higher advertising and media expenses further pressured margins and, in turn, EPS.

General Mills Misses Fiscal 1Q18 Estimates, Stock Falls

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Going forward, management expects sales to improve on the back of innovation and promotions. However, lower consumer demand and retailers destocking inventory could hurt its sales growth rate. Lower volumes are expected to remain a drag on profitability.

YTD share price movement

General Mills stock has fallen 15.5% on a YTD (year-to-date) basis as of September 20, 2017. Much of the fall is attributed to the company’s sluggish sales and recent earnings miss. GIS stock has largely underperformed the S&P 500 (SPX-INDEX), which has risen 12.0% since the beginning of the year. The Consumer Staples Select Sector SPDR ETF (XLP) has risen 5.6% on a YTD basis and has performed better than GIS stock in terms of returns.

Other food stocks also fell following General Mills’ tepid fiscal 1Q18 results. Most of them are also trading in the red on a YTD basis. Kellogg (K), Campbell Soup (CPB), J.M. Smucker (SJM), Kraft Heinz (KHC), and Conagra Brands (CAG) stock have fallen 12.2%, 23.1%, 16.7%, 8.5%, and 14.8%, respectively.

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