General Mills (NYSE:GIS), the packaged-goods powerhouse, has shown slowed growth over the past year, and this has caused its stock to underperform the overall market. One strong quarter could get General Mills' shares back on an upward track, and the company's third-quarter report is due out before the market opens on March 19. Let's take a look at the company's most recent quarter and the expectations for the upcoming report to determine whether now is our chance to buy General Mills or if we should wait to see what the report holds.

Source: General Mills.

The last time out
On Dec. 18, General Mills released its second-quarter report for fiscal 2014; here's a breakdown of the results:

Earnings Per Share $0.83 $0.89
Revenue $4.88 billion $4.96 billion

Source: General Mills' Instagram.

Source: Benzinga.

Earnings per share decreased 3.5% and revenue was unchanged year over year. International retail was General Mills' only segment that showed growth, with sales rising 2%; the U.S. retail and convenience store and food-service segments showed sales declines of 1% and 2%, respectively.

Even with these weak results, the company raised its full-year outlook and CEO Ken Powell followed this up by stating: "As we enter the second half of fiscal 2014, we expect our earnings growth to accelerate from first-half levels. We like our 2014 innovation and marketing plans, which include a strong slate of new items being introduced in the second half of the year."

The raised outlook offset most of the negativity from the earnings miss, and General Mills shares showed little reaction as a result.

Expectations and what to watch for
Current estimates for the third quarter call for slight growth; here's an overview:

Earnings Per Share $0.68 $0.64
Revenue $4.47 billion $4.43 billion

Source: Earnings Whisper.

These estimates call for General Mills' earnings per share to increase 6.3% and revenue to increase 0.9% year over year. These results would not result in a high-growth quarter by any means, but it would be much better than the second quarter, which saw negative and flat growth. Other than the key metrics, investors should watch for three other important statistics and updates: the gross margin, share repurchases, and the full-year outlook:

  1. The gross margin was a reported 34.4% in the third quarter a year ago and I would like it to see it expand further. General Mills achieved a 36.1% gross margin in its most recent release due to lower costs as a percentage of sales, and I believe lower costs could be an ongoing theme for the company. 
  2. In the first two quarters of the fiscal year, General Mills repurchased 18 million shares at an aggregate price of $864 million. I would like to see at least $350 million in repurchases during the third quarter, which would further reduce the number of shares outstanding.
  3. I would like General Mills to once again affirm its full-year earnings outlook; it already did so in the second-quarter report and again on Feb. 18, but investors would not mind hearing another confirmation. The outlook calls for earnings per share in the range of $2.87-$2.90, an increase of 6.7%-7.8% from the $2.69 earned in fiscal 2013.

Source: General Mills.

A sign of things to come?
Kellogg (NYSE:K), one of General Mills' largest competitors in the packaged-goods industry, released its fourth-quarter results on Feb. 6. The two companies are very similar, and we can use Kellogg's results to gauge the condition of the industry. Here's a breakdown of what Kellogg's report held:

Earnings Per Share $0.83 $0.82
Revenue $3.50 billion $3.52 billion

Source: Benzinga.

Source: Kellogg.

Earnings per share increased 18.6% and revenue declined 1.7% year over year. Sales in North America came in weaker than expected, with a decline of 2.8%, and Kellogg noted challenges in its developed cereal business as the primary area of weakness.

Sales were strong in the international regions, with growth of 4.2% in Asia-Pacific, 3% in Latin America, and 1.2% in Europe. Kellogg also gave its outlook on the fiscal year ahead, calling for earnings growth of 1%-3% and revenue growth of 1%. In summary, it was a decent report for Kellogg, but the company does not appear to be nearly as bullish on the next few quarters as is General Mills.

Overall, I believe Kellogg's report is a negative indicator for General Mills because the U.S. market has continued to show declining sales. Considering this information along with analysts' expectations, I would recommend waiting until after the earnings release before considering an investment in General Mills.

The Foolish bottom line
General Mills is a great American company, but it has been facing slower growth in its industry. Its third-quarter results are scheduled to be released in a few days, and I would be cautious about making a new investment before the release due to the weak sales results we saw from Kellogg. Foolish investors should wait until after the release to evaluate the quarter and General Mills' outlook on the rest of the year to determine if the stock has the potential to push higher. With this said, if the stock falls too drastically following the report, it would be worth buying as a high-dividend play, as it currently yields 3%. Watch General Mills closely, because at the right price, it would make a great addition to any Foolish portfolio. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.