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Could General Mills’ Earnings per Share Improve in Fiscal 2018?

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Dec. 4 2020, Updated 10:52 a.m. ET

General Mills’ EPS trend

General Mills (GIS) has reported improved bottom-line performance despite reporting weak volumes. The company’s focus on cost savings through its holistic margin management program has helped the company register higher EPS (earnings per share).

In the current fiscal year, a greater-than-expected rise in input costs and continued volume declines took a toll on its profitability.

Higher costs associated with commodities, freight, and packaging are also impacting food manufacturers Hershey (HSY), Kellogg (K), Mondelēz (MDLZ), and Campbell Soup (CPB). These companies have reported pressure on margins due to these rising costs.

General Mills’ fiscal 1Q18 EPS fell 9% on higher input costs and lower volumes. Meanwhile, its fiscal 2Q18 results are expected to be the same. The rate of decline in its EPS could be lower than in fiscal 1Q18.

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Could the margin headwinds subside?

General Mills (GIS) expects its adjusted EPS to increase 1.0%–2.0% on a constant currency basis in fiscal 2018. The company anticipates margin headwinds to subside in the coming quarters, which should boost its bottom-line growth.

Increased cost savings and favorable currency rates are expected to drive its bottom-line growth. A lower share count should cushion the company’s EPS.

Analysts expect the company’s EPS to remain even with the prior year in fiscal 2018, as the cost-saving benefits should be offset by soft volumes and increased input costs. However, analysts project a 4.3% rise in the company’s EPS in fiscal 2019.

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