Minneapolis-based General Mills (GIS) is set to announce its fiscal 3Q17 results before the market opens on Tuesday, March 21, 2017. Fiscal 3Q17 extends from November 28, 2016–February 28, 2017.
On March 15, 2017, General Mills was trading at $61.16, which represents a decline of 3.0% since the company announced its fiscal 2Q17 earnings on December 20, 2016. The lower-than-expected fiscal 2Q17 earnings, as well as its reduced sales guidance and EPS (earnings per share) growth for fiscal 2017, could have made investors skeptical of future earnings, leading to a decline in its stock price.
In fiscal 2Q17, the company posted EPS of $0.85 against analysts’ estimate of $0.87. On February 17, 2017, the company announced that its sales for fiscal 2017 would fall 4% from its earlier estimate of a decline in the range of 3%–4%. The company’s management also lowered its EPS growth guidance to range from 5%–7% from its earlier guidance of 6%–8%.
Since the beginning of 2017, the company’s stock has fallen 1.0% as the company struggled in the Yogurt and Soup categories in the US. This faltering performance was due to the widening gap between the promotional activities of General Mills and its competitors.
During the same period, Kellogg (K), B&G Foods (BGS), and Pinnacle Foods (PF) have returned 1.4%, -4.0%, and 10.1%, respectively. The broader comparative index, the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS), has returned 6.0% year-to-date. RHS has 35.6% of its total holdings in food and beverage companies.
In this series, we’ll explore what investors can expect from General Mills’s fiscal 3Q17 earnings release. We’ll discuss analysts’ estimates for revenues, margins, and EPS. We’ll also look at the company’s valuation multiples and its expected stock price over the next 12 months.
Let’s start by discussing General Mills’s fiscal 3Q17 revenue.