Inside General Mills’ Fiscal 2Q17 Earnings

Price movement

General Mills (GIS) has a market cap of $36.9 billion and fell 2.6% to close at $61.45 per share on December 20, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -3.6%, 0.31%, and 9.7%, respectively, on the same day.

GIS is now trading 1.4% below its 20-day moving average, 0.64% below its 50-day moving average, and 4.4% below its 200-day moving average.

Inside General Mills’ Fiscal 2Q17 Earnings

Related ETF and peers

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 1.9% of its holdings in General Mills. The YTD price movement of FSTA was 5.6% on December 20.

The market caps of General Mills’ competitors are as follows:

  • Kellogg (K): $25.8 billion
  • Hershey (HSY): $21.7 billion
  • Post Holdings (POST): $5.0 billion

General Mills’ performance in fiscal 2Q17

General Mills reported fiscal 2Q17 net sales of $4.1 billion, which represents a YoY (year-over-year) fall of 7.1% from its net sales of $4.4 billion in fiscal 2Q16. Sales from the US Retail, International, and Convenience Stores & Foodservice segments fell 8.7%, 4.7%, and 3.6%, respectively, YoY in fiscal 2Q17. The company’s gross profit margin expanded 220 basis points, and its operating margin narrowed 180 basis points in fiscal 2Q17 YoY.

Its net income and EPS (earnings per share) fell to $481.8 million and $0.80, respectively, in fiscal 2Q17, as compared to $529.5 million and $0.87, respectively, in fiscal 2Q16. It reported adjusted EPS of $0.85 in fiscal 2Q17, which represents a rise of 3.7% over fiscal 2Q16.

GIS’s cash and cash equivalents and inventories rose 24.6% and 4.8%, respectively, YoY in fiscal 2Q17. Its current ratio fell to 0.66x, and its debt-to-equity ratio rose to 3.9x in fiscal 2Q17, as compared to 0.79x and 3.2x, respectively, in fiscal 2Q16.

Quarterly dividend

General Mills has declared a quarterly dividend of $0.48 per share on its common stock. The dividend will be paid on February 1, 2017, to shareholders of record as of January 10, 2017.

Projections

The company has made the following projections for fiscal 2017:

  • organic net sales growth to fall in the range of 3%–4%
  • total segment operating profit growth in the range of 2%–4% on a constant-currency basis
  • It expects adjusted operating profit margin to rise 150 basis points
  • adjusted EPS growth in the range of 6%–8% on a constant-currency basis.

In the next and final part of this series, we’ll discuss Nike (NKE).