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General Mills: Analysts’ Recommendations

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Sales growth to decelerate

General Mills (GIS) reported strong sales growth in the past three quarters due to incremental sales from the Blue Buffalo acquisition. Meanwhile, higher net price realizations and a favorable mix supported the company’s organic sales. Analysts expect General Mills’ net sales to mark high-single-digit growth in the fiscal fourth quarter due to the acquisition and higher pricing.

However, the sales growth rate is projected to decelerate significantly in fiscal 2020 as the company annualizes its Blue Buffalo acquisition and faces tough YoY (year-over-year) comparisons. Persisting weakness in the organic volumes could remain a drag.

Analysts expect General Mills’ top line to mark low-single-digit growth in fiscal 2020. Analysts’ estimate indicates 1% growth in the first quarter of fiscal 2020. The sales are expected to mark 2% growth in the fiscal second quarter.

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EPS to stabilize

Analysts’ expect General Mills’ bottom line to stabilize in fiscal 2020 and return to the growth trajectory. However, the rate of earnings growth will likely be low, which reflects weak volumes, cost headwinds, a higher share count, and increased interest expenses. However, higher net pricing and easy comps are expected to support the earnings growth rate.

Analysts expect General Mills’ bottom line to mark ~5% growth in fiscal 2020.

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