General Mills earnings preview: Expect strong results in Q1

General Mills (NYSE: GIS) is slated to report first quarter 2020 earnings results on Wednesday, September 18, before the opening bell. The Street expects earnings to grow 8.5% to $0.77 per share. Revenue is estimated to be $4.08 billion.

General Mills has laid out a framework to drive growth in fiscal year 2020 and this plan includes driving innovation and improving marketing and in-store execution. The company increased the pace of new product innovation to nearly 5% in fiscal year 2019.

General Mills also aims to drive growth across its
differential platforms, including Haagen-Dazs
ice cream, snack bars, Old El Paso
Mexican food and its portfolio of natural and organic brands. These initiatives
are expected to benefit the company in the first quarter.

The consumer foods producer is revamping its portfolio
through prudent acquisitions and divestitures and an example of this strategy
paying off is the Blue Buffalo acquisition which has proved beneficial to the
company. These efforts are also expected to help results in the to-be-reported
quarter.

Like its peers, General Mills is struggling with higher input costs which are likely to pressure margins in the quarter. However, the company has been taking several measures to reduce costs and these efforts are likely to help earnings.

Also see: General Mills Q4 2019 Earnings Call Transcript

In the fourth quarter of 2019, General Mills beat earnings estimates but revenues missed expectations. Revenue grew 7% to $4.16 billion and adjusted EPS rose 6% to $0.83 per share.

For fiscal 2020,
General Mills expects a 1-2% increase in organic net sales, while
constant-currency adjusted EPS is expected to grow 3-5% from the base of $3.22
earned in fiscal 2019.

Shares of General Mills have gained 39% thus far this year. The stock has an average price target of $54.67.

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