General Mills Inc. ( GIS ) recently
reaffirmed its previously provided fiscal 2013 guidance at the
Consumer Analyst Group of New York (CAGNY) investor conference
being held in New York. In addition, the food giant expects growth
in 2014 to be in line with its long-term goals.
Fiscal 2013 Guidance Retained
Fiscal 2013 adjusted earnings are expected to range between
$2.65 and $2.67. Both sales and operating profit are expected to
increase in the mid-single-digit range. More importantly, the
guidance includes benefits from the recent acquisition of Yoki in
Brazil and Yoplait yogurt business in Canada. Excluding the impact
of acquisitions and currency headwinds, organic sales are expected
to grow at a low-single-digit rate.
The U.S. retail business is expected to deliver low single-digit
sales growth while operating profit is expected to grow faster than
sales. International sales are expected to exceed $5 billion in
2013, gaining largely from the Yoki and Yoplait acquisitions.
Outlook for Fiscal 2014
In fiscal 2014, General Mills plans for stronger earnings growth
and increased cash returns to shareholders. Growth is expected to
be in line with its long-term targets; high single-digit growth in
earnings, low-single-digit growth in net sales; mid-single-digit
growth in segment operating profit. Acquisitions are expected to
add 15 cents to earnings in fiscal 2014.
Moreover, the company plans to increase dividends and share
buybacks in the year, thus offering greater shareholder value. The
increased buybacks are expected to lower the average number of
shares outstanding by 2% in fiscal 2014.
The U.S retail business is expected to benefit from new product
launches and increased innovation, while the international business
will gain largely from the newly acquired businesses.
General Mills carries a Zacks Rank #3 (Hold). We are encouraged
by the company's strong market share position in some leading food
categories, its strengthening international presence, strategic
acquisitions and focus on innovation and brand support. These
growth initiatives combined with the cost saving efforts bode well
for the company's long-term growth. However, we prefer to remain on
the sidelines until the U.S. retail volumes improve substantially,
the Yoplait yogurt business delivers and the macroeconomic
Other Stocks to Consider
Some stocks going strong in the food industry are
ConAgra Foods, Inc ( CAG ), Flower
Foods Inc ( FLO ) and
J&J Snack Foods Corp ( JJSF ), all carrying a
Zacks Rank #1 (Strong Buy).CONAGRA FOODS (CAG): Free Stock Analysis ReportFLOWERS FOODS (FLO): Free Stock Analysis ReportGENL MILLS (GIS): Free Stock Analysis ReportJ&J SNACK FOODS (JJSF): Free Stock Analysis
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