General Mills Earnings: This Margin Expansion has Shareholders Smiling

S&P 500 (NYSE:SPY) component General Mills Inc. (NYSE:GIS) reported its results for the first quarter. General Mills is a manufacturer and marketer of branded consumer foods sold through retail stores. It also supplies branded and unbranded food products to the food service and commercial baking industries.

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General Mills Inc. Earnings Cheat Sheet

Results: Net income for General Mills Inc. rose to $548.9 million (82 cents per share) vs. $405.6 million (61 cents per share) in the same quarter a year earlier. This marks a rise of 35.3% from the year-earlier quarter.

Revenue: Rose 5.3% to $4.05 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: General Mills Inc. reported adjusted net income of 66 cents per share. By that measure, the company beat the mean estimate of 63 cents per share. Analysts were expecting revenue of $4.11 billion.

Quoting Management: Chairman and Chief Executive Officer Ken Powell said this start has the company on pace to achieve its fiscal 2013 targets. “Results for the first quarter were broadly consistent with our plans, and included sequential improvement in our volume and gross margin trends from the fourth quarter of 2012,” he said.

Key Stats:

Revenue has risen the past four quarters. Revenue increased 11.9% to $4.07 billion in the fourth quarter of the last fiscal year. The figure rose 13% in the third quarter of the last fiscal year from the year earlier and climbed 13.7% in the second quarter of the last fiscal year from the year-ago quarter.

The company has beaten estiamtes for two quarters in a row. In the fourth quarter of the last fiscal year, it topped expectations with net income of 60 cents versus a mean estimate of net income of 58 cents per share.

Margins were up in the fourth quarter of the last fiscal year, following a drop in the previous quarter. Gross margins grew to 40.2%, up 2.6 percentage points from the year-earlier quarter. In the third quarter of the last fiscal year, the figure rose 0.8 percentage point to 36.8% from the year earlier quarter.

Net income has dropped 1% year-over-year on average across the last five quarters. Performance was hurt by a 27.5% decline in the second quarter of the last fiscal year from the year-earlier quarter.

Looking Forward: For the next quarter, analysts are growing pessimistic about the company’s expected results. The average estimate for the second quarter is 80 cents per share, dropping from 82 cents a month ago. For the fiscal year, the average estimate has moved down from $2.76 a share to $2.66 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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