Yahoo Finanza General Mills Shares Slide After Q2 Earnings Disappoint
General Mills shares fell over 5% in pre-market trading on Tuesday after the manufacturer of branded consumer foods reported lower-than-expected earnings in the fiscal second quarter despite the company beating revenue expectations and lifting its annual sales forecast.
The Golden Valley, Minnesota-based company said its earnings per share fell 7% to $0.99, missing the Wall Street consensus estimates of $1.05. However, the company said its net sales rose to $5.02 billion up from $4.72 billion seen a year ago. That was above the market expectations of $4.84 billion.
Operating profit declined 13% to $800 million; constant-currency adjusted operating profit was down 6%, reflecting significant input cost inflation and elevated costs related to supply chain disruptions
In fiscal 2022, the company now expects organic net sales to increase between 4% and 5% up from the previous forecast of 1% to 3% decline. That reflect stronger net sales growth, higher costs, and the impact of the European Yoplait divestiture.
The company’s constant-currency adjusted diluted EPS are now expected to range between down 2% and up 1%, driven by the same changes impacting the adjusted operating profit outlook, including an estimated 1% reduction from the European Yoplait divestiture. Adjusted diluted EPS were previously expected to be toward the higher end of the range of flat to down 2%.
General Mills stock slumped over 5% to 64.35 in pre-market trading on Tuesday. It soared over 15% so far this year.
Executive Comments
“We continued to compete effectively and execute well this quarter in a challenging operating environment,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
“In the face of an unprecedented combination of input cost inflation and supply chain disruptions, we’re moving quickly to keep our trusted brands on store shelves for consumers while driving net price realization to protect our bottom line. As a result, we now expect to meet or exceed each of our financial targets for the year. We also advanced our portfolio reshaping efforts in the quarter, and we’re more confident than ever that General Mills will emerge from the pandemic a stronger company better geared to generate profitable growth in line with our Accelerate strategy.”
Analyst Comments
“We forecast slight LT organic sales growth after outsized +4% FY20 organic growth on COVID-19 related demand, with muted category and geographic growth. GIS also has a limited margin expansion opportunity (we model +10 bps/yr) with an already efficient cost structure, and we worry about GM pressure given higher commodities,” noted Pamela Kaufman, equity analyst at Morgan Stanley.
General Mills Stock Price Forecast
Eight analysts who offered stock ratings for General Mills in the last three months forecast the average price in 12 months of $67.88 with a high forecast of $74.00 and a low forecast of $64.00.
The average price target represents a 0.13% change from the last price of $67.79. Of those eight analysts, three rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $51 with a high of $68 under a bull scenario and $38 under the worst-case scenario. The firm gave an “Underweight” rating on the food company’s stock.
Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $67 from $62. Deutsche Bank lifted the price objective to $72 from $71. Piper Sandler upped the price target to $74 from $70.
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This article was originally posted on FX Empire
