Are Investors Running Out of Pantry Space for General Mills?
General Mills (NYSE: GIS) is the 6th largest food company in the world. The company makes everything from Cheerios to Yoplait yogurt and Haagen-Daz ice cream. On Thrusday, GIS released its quarterly earnings. Shares are up less than 3% for the entire year, will the latest earnings give investors the much needed boost their portfolios are starving for?
Earnings: General Mills reported a net income of $613.9 million ( 92 cents per share). This was an improvement to last year’s $565.5 million (83 cents per share). However, excluding tax benefits and mark-to-mark accounting, earnings were only 76 cents per share.
Revenue: Total revenue increased slightly to $4.07 billion. Larger gains were seen in Asia and Latin America. International revenue increased 4% to $749 million. Total segment operating international profit increased 25%, but US retail sales were remained flat.
Actual versus Wall Street Expectations: Actual earnings of 76 cents per share was a 2 cent disappointment to analysts. GIS reaffirmed earnings guidance of $2.46 to $2.48 for fiscal year 2011. Analysts are expecting GIS to hit the top range of earnings for fiscal 2011.
Notable Stats: For over a century, General Mills has paid shareholders a dividend, which has never been reduced or suspended. The current dividend yield is just over 3%.
Did You Hear That? CEO Ken Powell said, ” The operating environment in the first half of 2011 included high levels of price promotion by food manufacturers and retailers.”
Commentary: Although General Mills is a large worldwide consumer known company, they still have to discount prices in order to appeal to consumers in this economy. Ongoing rising price competition and commodity prices need to be monitored closely by shareholders.
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Disclosure: No positions.