General Mills (GIS) stock was trading about 5% higher during the pre-market session today following the company’s better-than-expected third-quarter results and strong guidance. General Mills’ top line sustained its momentum and rose 8.1% during the reported quarter. Incremental sales from its Blue Buffalo acquisition, higher pricing, and a favorable mix drove the company’s top line, which came in slightly ahead of analysts’ estimate.
Organic sales improved thanks to the higher pricing and mix. However, weak organic volumes remained a drag. The base business of packaged food companies continues to witness challenges amid a consumer shift towards healthier foods. Also, increased competition from the private label products further remains a drag. However, net sales growth accelerated on the back of recent acquisitions.
General Mills continued to impress with its performance on the margins front. General Mills’ third-quarter profit margins expanded, reflecting higher pricing, benefits from the acquisition, a favorable mix, and cost savings. However, higher input costs continued to hurt.
General Mills’ adjusted EPS crushed analysts’ estimate as improved sales and expanded margins drove the bottom-line growth. However, cost headwinds and increased interest expenses restricted the growth rate.
General Mills reported net sales of $4.2 billion, which increased 8.1% on a YoY basis and came in slightly ahead of analysts’ estimate. Organic sales increased by 1% driven by higher pricing and mix. Adjusted gross margin expanded 170 basis points. Meanwhile, operating margins expanded by a solid 230 basis points.
General Mills posted adjusted earnings of $0.83 per share, which increased about 5% on a YoY basis and crushed analysts’ estimate of $0.69.