General Mills (NYSE:GIS) shares are under pressure today after the branded consumer foods provider delivered a mixed set of second-quarter numbers, and its financial outlook disappointed investors.
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Revenue declined by 2% year-over-year to $5.1 billion, falling short of expectations by $250 million. However, EPS of $1.25 exceeded estimates by $0.09. Amid challenging consumer trends and a slower-than-anticipated volume recovery, GIS plans to eliminate disruption-related jobs in its supply chain.
During the quarter, lower volumes were partially offset by favorable net price realization and product mix. Further, net sales declined across its Pet and North America Retail verticals. However, cost savings and lower compensation expenses helped the company improve its operating profit margin by 50 basis points to 15.8%.
The company expects performance for Fiscal Year 2024 to be impacted by weak consumer trends, labor inflation, and slower volume recovery. Consequently, organic net sales growth is anticipated to be between -1% and flat versus the previous expectation of 3% to 4% growth. Adjusted EPS for the year is expected to increase by 4% to 5%.
Is GIS a Good Buy?
Overall, the Street has a Hold consensus rating on General Mills. After a nearly 24% slide in its share price over the past year, the average GIS price target of $68.90 points to a modest 3.3% potential upside in the stock.
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