Shares of General Mills, Inc. (NYSE:GIS) touched a new 52-week high of $67.91 on Jun 29 following impressive fourth-quarter fiscal 2016 results, before market open.
Investors are also encouraged by the food company’s decision to raise its quarterly dividend by 4% and hike its cost saving target from various restructuring projects.
What Led to the Rise?
General Mills reported better-than-expected fourth-quarter results, beating the Zacks Consensus Estimate for both earnings and sales.
Adjusted earnings per share of 66 cents beat the Zacks Consensus Estimate of 60 cents by 10%. However, earnings declined 12% year over year. A stronger U.S. dollar hurt earnings by 1%. On a constant currency basis, earnings declined 11% as cost savings from restructuring activities and a lower tax rate were offset by lower year-over-year sales and higher input costs.
Although sales decreased 8.6% to $3.93 billion year over year due to the Green Giant divesture, currency headwinds and difficult year-over-year comparisons, it grew 1% organically and also beat the Zacks Consensus Estimate by 2.3%.
General Mills is currently pursuing several multi-year restructuring initiatives - Projects Century, Catalyst, and Compass – which include job cuts and factory closings, to generate cost savings and support its key growth strategies.
In an attempt to boost shareholders’ value, the company lifted its quarterly dividend payout by 4% to 48 cents per share, payable on Aug 1, 2016, to shareholders of record as of Jul 11, 2016. This adds up to an annual dividend of $1.92, representing a dividend yield of almost 3%.
Looking Ahead
For fiscal 2017, General Mills, currently carrying a Zacks Rank #3 (Hold), expects earnings to grow in a range of 6%–8% from the fiscal 2016 level of $2.92 per share. This translates into earnings of $3.09–$3.15 per share, which is above the current Zacks Consensus Estimate of $3.05 per share.
Stocks to Consider
Better-ranked stocks in the food miscellaneous diversified sector include B&G Foods Inc. (NYSE:BGS) , ConAgra Foods, Inc. (NYSE:CAG) and Post Holdings Inc. (NYSE:POST) . While Post Holdings sports a Zacks Rank #1 (Strong Buy), Con Agra and B&G Foods carry a Zacks Rank #2 (Buy).
GENL MILLS (GIS): Free Stock Analysis Report
CONAGRA FOODS (CAG): Free Stock Analysis Report
B&G FOODS CL-A (BGS): Free Stock Analysis Report
POST HOLDINGS (POST): Free Stock Analysis Report
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Zacks Investment Research