General Mills (NYSE: $GIS), a leader in the packaged foods industry, released its Q1 fiscal 2025 results on Wednesday, September 18. Here is a breakdown of the results.
General Mills Q1 Results
For the first quarter of fiscal 2025, General Mills reported sales of $4.8 billion, a 1% year over year decline, while adjusted EPS came in at $1.07, a 2% year over year decline. Revenue was in line with forecasts while earnings beat estimates by $0.02.
The gross margin fell 130 bps to 34.8%, while the adjusted gross margin of 35.4% remained constant year over year. The operating profit margin fell 180 bps to 17.2%, while the adjusted operating profit margin fell 50 bps to 17.8%.
Cash from operating activities came in at $624 million compared to $378 million last year, while capital investments were $140 million compared to $142 million last year.
General Mills paid out $338 million in dividends for the first quarter and bought back $300 million worth of shares compared to $500 million the previous year.
What Analysts Expected
Analysts forecast General Mills’ top and bottom lines will decline in the first quarter of fiscal 2025. They forecast revenue of $4.78 billion, a 2.5% decline year over year. For earnings, analysts forecast $1.05 per share, which would be a 3.7% decline year over year.
Previous Results
In the fourth quarter of fiscal 2024, General Mills reported revenue of $4.71 billion, a 6.3% year-over-year decline and 3% below estimates. Earnings for the quarter came in at $0.98. Analysts had expected revenue of $4.85 billion, and earnings of $0.995. After the release of its fourth-quarter results, General Mills stock fell 4.95%.
General Mills Fiscal 2025 Forecast
In the Q125 results, General Mills reaffirmed its previous forecast. The company expects full year sales of between flat and a 1% increase, while the adjusted operating profit is expected to be between flat and a 2% decline.
The company expects an adjusted diluted EPS of between a 1% decline and a 1% increase, while free cash flow conversion is expected to be 95% of adjusted after-tax earnings.
General Mills said it expects macroeconomic uncertainty, which would influence the channels consumers purchase through, and the products they buy. It noted that inflation for goods and services in the US remained at historic highs, which would impact its input costs for fiscal 2025 by 3% to 4%.
General Mills (GIS) Market Performance
General Mills is the first among its peers in the staples sector to release earnings. Investors in this segment have remained steady thus far, with stocks up an average of 1.4% in the segment over the past month.
In the past three months, the Consumer Defensive sector, which GIS is part of, is up 7.8%, beating the S&P 500, which is up 2.9% in the same period. In the same period, GIS is up 12.4%, which is proof of the stock’s resilience amid market headwinds.
Year to date, GIS stock is up 14.4% to $74.50 as of Tuesday’s close, while in the past 12 months, it is up 13.14%. The stock price is currently above both the 50 and 200 DMAs of $69.01 and $67.18, respectively.
Analysts give GIS stock an overall hold rating. They forecast a wide range of prices for the stock, with a high of $78 and a low of $63. Their average price forecast of $70.50 is a 5.37% downside based on the most recent price of $74.50.
Is GIS A Buy?
Analysts remain confident in General Mills brand strength, and its focus on the Accelerate strategy. The company has opted to focus on its core markets, and brands that show promise.
Its emphasis on brand marketing and innovation have helped it strengthen its portfolio. General Mills has also adopted a Holistic Margin Management (HMM) strategy to help it boost efficiency.
Looking at its valuation, GIS has a trailing twelve-month P/E ratio of 17.10, which is significantly lower than the average of 24.49 for the packaged foods industry. Consequently, it could be a discount purchase. However, the stock has underperformed the market in recent months, and investors could find more lucrative opportunities elsewhere.
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