General Mills Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and General Mills (NYSE: GIS  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

General Mills has a simple business model, with its well-known food products having graced breakfast tables for decades. But the food business has gotten a lot more cutthroat lately. Let's take an early look at what's been happening with General Mills over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on General Mills

Analyst EPS Estimate

$0.57

Change From Year-Ago EPS

3.6%

Revenue Estimate

$4.36 billion

Change From Year-Ago Revenue

5.8%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will General Mills feed investors well this quarter?
Analysts have had mixed views about General Mills over the past few months. They've reined in their earnings-per-share estimates for the most recent quarter by $0.02, but they've added a penny to their calls for fiscal 2013 and 2014. The stock, meanwhile, has soared more than 12% since mid-December.

Much of the investor interest in General Mills lately has come from Berkshire Hathaway's decision to buy out ketchup giant Heinz (UNKNOWN: HNZ.DL  ) . The move has awakened speculation about which major food-maker might be next to be acquired, even though few buyers have the capacity to buy out such a huge company. General Mills is quite a bit larger than Heinz, making a buyout even less likely.

Yet sticking with its fundamentals, General Mills has had to deal with increased competition in the food space. Name-brand rival Kellogg (NYSE: K  ) has come out with a breakfast-shake product called Breakfast To Go that is designed to cater to time-pressed consumers, and the move has forced General Mills to reciprocate with its own similar product. A potentially even greater threat may come from private-label foods, as ConAgra's (NYSE: CAG  ) buyout of Ralcorp Holdings has made it a giant in the store-brand arena, where many struggling supermarket chains are looking to try to boost margins.

Last week's decision from General Mills to boost its dividend by 15% certainly added to the stock's appeal. The increase pushes the stock's yield above 3%, comparing favorably with both ConAgra and Kellogg.

In its quarterly report, watch for General Mills to detail its attempts to rein in high food input costs while boosting growth. In a tough environment, General Mills needs to do everything it can to show that it's staying ahead of changing trends in the food industry.

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