uploads///GIS EPS

Why GIS’s Earnings Could Remain Pressured in the Near Term


Jan. 3 2019, Updated 11:20 a.m. ET

What Wall Street expects

General Mills’ (GIS) earnings remained under pressure recently due to soft sales, weak margins, and higher interest expenses. Despite these challenges, General Mills impressed with its bottom line performance and reported better-than-expected earnings in the past four quarters. General Mills’ cost-saving measures and lower effective tax rate supported its bottom line.

The profitabilities of the company’s peers the Hershey Company (HSY), the Kellogg Company (K), Conagra Brands (CAG), and the J.M. Smucker Company (SJM) are also taking hits due to their weak margins and increased interest expenses. However, lower effective tax rates and cost-saving measures continue to cushion their bottom lines.

Article continues below advertisement

Wall Street expects General Mills’ bottom line to remain weak in the coming quarter. Softness in organic volumes, higher interest expenses, and an increased outstanding share count are likely to take a toll on its earnings. Analysts expect General Mills’ bottom line to fall 12.9% in the third quarter of fiscal 2019. Meanwhile, its fiscal 2019 EPS are expected to fall 1.4%.


We believe that General Mills’ EPS will remain subdued owing to higher interest expenses driven by higher debt related to the funding of its Blue Buffalo acquisition. Meanwhile, its higher outstanding share count could put more pressure on its bottom line. However, higher pricing, cost-saving efforts, and a lower effective tax rate could continue to cushion its bottom line in the near term.


More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.