Investors haven't found much to celebrate in General Mills(NYSE:GIS) last few earnings reports. The snack and cereal specialist managed zero sales growth in 2017, after all, and has been taking big charges tied to a portfolio reboot plan that hasn't yet yielded concrete results.

But those bleak operating trends could be improving. In its latest quarterly release, the company announced steady sales and a surprising profit increase. Below, we'll look at the key takeaways for the period that management outlined in the earnings conference call.

On track for a sales rebound

Through six months, our shipments have lagged consumer takeaway by about one point, with organic net sales down 2% and U.S. retail sales down 1%. Looking ahead to the rest of the year, we expect our shipments to track more closely to consumer takeaway.
-- CFO Donal Mulligan

General Mills' acquisition of the Blue Buffalo pet food franchise is going off just as planned, with its 9% sales increase driving the company's overall revenue gains over the past six months.

Two children eating cereal at a kitchen island

Image source: Getty Images.

The core business is performing better than it appears, too. While retail organic sales dropped 2% in the U.S. this past quarter, sales to shoppers (what management calls "consumer takeaway"), are closer to flat due to an unusually retail shipment boom in the year-ago period.  That temporary gap helps explain why management still thinks they'll log a modest sales increase for the full year even though organic revenue hasn't budged through the first half of 2019.

Mixed portfolio performance

We're competing well across most categories this year as measured by our market share performance. We grew share in six of our nine largest U.S. categories in the first half. However, we know there's still work to do, including in cereal and snack bars, our top two categories.
-- CEO Jeff Harmening

General Mills posted a painful 7% volume drop in its U.S. cereal sales, which management blamed on deliberate moves aimed at boosting average prices. The snack bar division was weak, too, across both the Nature Valley and FiberOne franchises. Executives expect that segment to continue contracting for the time being while cereal sales should accelerate now that the price changes have rolled out.

On the bright side, General Mills is winning market share in yogurt and is also seeing strong demand for its smaller but faster-growing brands like Haagen-Dazs and Larabar.

The metrics to watch

While we feel good about the progress we've made against our fiscal 2019 priorities, we know that there's still work to do to ensure that we deliver a successful year.
-- Harmening

General Mills is running ahead of its earnings targets for the year but the bigger reason for investors' growing optimism is its forecast for major operating improvements to come. The company is expecting the cereal business to accelerate, for example, which should lead the U.S. retailing segment back into positive territory over the next two quarters. Sales and profitability are expected to march higher in the Blue Buffalo segment, too. These successes should combine with aggressive cost-cutting to move adjusted operating margin significantly higher.

Positive forecasts are one thing, though, and now it is up to General Mills to back up those words by delivering the better growth and profitability metrics management is targeting. Otherwise, the stock could continue underperforming the market -- just as it has over the last few years.