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General Mills Crushes Q4 Estimates, Stock Falls 2%

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General Mills (NYSE:GIS) stock fell 2.0% on Wednesday and ended the day at $60.43 with a market cap of $36.6 billion. The company reported its results for the fourth quarter of fiscal 2020, which ended May 31, on Wednesday. General Mills reported better-than-expected fourth-quarter results. The company’s fourth-quarter net sales and adjusted earnings beat Wall Street’s estimates.

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General Mills’ Q4 earnings results

In the fourth quarter, General Mills reported an adjusted EPS of $1.10 compared to $0.83 in the fourth quarter of fiscal 2019. The adjusted EPS beat analysts’ consensus expectation of $1.06. General Mills generated sales of $5.02 billion—a rise of 20.7% from the same quarter last year. The food company beat analysts’ consensus sales expectation of $4.97 billion. Strong demand for at-home food items amid the coronavirus pandemic boosted the company’s revenue.

In the fourth-quarter earnings release, General Mills said, “The COVID-19 pandemic has had a profound impact on consumer demand across the company’s major markets, including driving an unprecedented increase in demand for food at home and a corresponding decrease in away-from-home food demand resulting from efforts to reduce virus transmission.” The report also said, “The company estimates that at-home food represented approximately 85 percent of its pre-pandemic worldwide net sales and away-from-home food represented the remaining 15 percent.”

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Wall Street analysts expect General Mills to report an adjusted EPS of $0.87 on revenue of $4.19 billion in the first quarter of fiscal 2021. Wall Street analysts also expect General Mills’ revenues to fall by 2.9% YoY (year-over-year) in fiscal 2021 to $17.1 billion. The sales could rise by 0.9% YoY in fiscal 2022 to $17.3 billion. The adjusted earnings will likely fall by 2.5% YoY in fiscal 2021 to $3.52 per share. However, the profits could rise by 3.1% YoY to $3.63 per share in fiscal 2022.

Analysts’ recommendations

Among the 18 analysts tracking General Mills stock, four recommend a “buy,” 12 recommend a “hold,” and two recommend a “sell.” Wall Street analysts’ mean target price on the stock is $63.38, which implies a 4.9% gain from the current level of $60.43. The consensus target price for the stock has risen from $62.06 in June—a growth of 2.1%.

Many analysts changed their target price for General Mills stock after its recent earnings report.

  • CFRA increased its target price from $62 to $67.
  • J.P. Morgan increased its target price from $60 to $63.
  • RBC increased its target price from $63 to $64.
  • Stifel decreased its target price from $62 to $60.

Stock returns

On a year-to-date basis, General Mills stock has risen by 12.8% as of Wednesday. Notably, the stock is trading 6.0% below its 52-week high of $64.31 and 29.7% above its 52-week low of $46.59.

Based on the closing price on Wednesday, General Mills stock was trading 1.2% below its 20-day moving average of $61.16. The stock is also trading 0.9% below its 50-day moving average of $61.00 and 5.0% above its 100-day moving average of $57.57. General Mills’ 14-day relative strength index score is 47. The score indicates that the stock isn’t oversold or overbought.

General Mills has an upper Bollinger Band level of $62.93. The company’s middle Bollinger Band level is $61.16, while its lower Bollinger Band level is $59.39. On Wednesday, the stock closed near its middle Bollinger Band level, which shows that the stock isn’t oversold or overbought.

On Wednesday, J.M. Smucker (NYSE:SJM) and Campbell Soup (NYSE:CPB) stocks fell 0.56% and 0.64%, respectively. J.M. Smucker and Campbell Soup’s target prices suggest potential returns of 8.9% and 6.8%, respectively.

On the same day, the S&P 500 and the Dow Jones Industrial Average returned 0.50% and -0.30%, respectively.

Read Is General Mills Stock a Good Buy amid COVID-19? to learn more.

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