Shares of General Mills (GIS) have outperformed the broader markets so far this year as back-to-back impressive performances in its bottom line, margin expansion, and outlook have driven its stock higher.
General Mills stock is up 31.2% YTD (year-to-date) as of March 25. In comparison, the S&P 500 Index registered an increase of 11.6%. Meanwhile, the Consumer Staples Select Sector SPDR ETF is up 8.7% so far this year.
We’re impressed with General Mills’ recent performance on the sale and profitability front and its improved near-term earnings outlook. However, we don’t like its projected growth rate. We expect General Mills’ top line, which has grown at a high-single-digit rate recently, to see a significant slowdown in growth in fiscal 2020. General Mills’ net sales are projected to increase at a low-single-digit rate in fiscal 2020.
General Mills’ organic sales are expected to benefit from higher net price realizations and an improved mix. However, weakness in its organic volumes is expected to limit its growth rate. General Mills’ EPS are expected to stabilize in fiscal 2020. However, its rate of growth is likely to be low.