General Mills Inc. (NYSE:GIS), the U.S. international producer and marketer of branded consumer foods that are sold through retail stores, will release the financial figures for the first quarter of fiscal 2018 before the New York Stock Exchange opens Sept. 20.
The U.S. retail stores chain company derives its income from a well-diversified portfolio, which is composed of over 89 popular brands in North America. Some of them are: Betty Crocker, Yoplait, Colombo, Annie's Homegrown, Totino's, Pillsbury, Old El Paso, Cheerios, Cocoa Puffs and many others.
From this well-assorted popular brands portfolio, analysts expect the company will close the quarter with an EPS of 77 cents on average. Estimates on the first quarter of fiscal 2018 earnings per share range between a low of 74 cents and a high of 80 cents.
Source: Yahoo Finance
The average figure of EPS represents a 1.3% decline from the same item of one year ago and that analysts foresee will be dropped by a top line of revenue that is expected to come in at $3.79 billion.
Source: Yahoo finance
Compared to the same quarter of fiscal 2017, General Mills is forecasted to invoice fewer customers for 3%. Estimates on revenue range between a low of $3.72 billion and a high of $3.91 billion.
With the first-quarter report, General Mills also will update its shareholders on figures of its balance sheet that, as of the most recent quarter, is characterized by having approximately $766.1 million in cash on hand and securities or $1.33 per share and about $9.48 billion in total debt for a debt-equity ratio of 169.43% versus an industry average of 106.26%. Compared to its peers General Mills’ balance sheet is more leveraged, though, with an interest coverage ratio of 3.83, it can easily take its financial burden.
Values for the most recent quarter’s total assets and liabilities tell that General Mills’ current ratio is 0.76 versus an industry average of 1.26. This means that, compared to its peers, the company has to struggle more in meeting its short-term obligations with its liquidity and other assets that can be readily converted into cash.
GuruFocus gives General Mills a financial strength rating of 4 out of 10.
The company is trading at $55.80 per share versus an average target price of $56.72 and with a market capitalization of $32.2 billion. The price-book (P/B) ratio is 7.44, the price-sales (P/S) ratio is 2.06, and the price-earnings (P/E) ratio is 20.14.
If analysts’ estimates on General Mills’ earnings and sales become reality, we may experience a pullback in the market value of this stock for which the consensus is today on a hold recommendation with a rating of 3.1 out of 5 and that is trading just above its 52-week low of $52.76 per share. The 52-week high is $65.57 per share.
But if a door closes, a front gate may open to a street with a long sequence of positive events for General Mills' investors: After a pullback in the market value of General Mills following the first quarter of fiscal 2018 earnings release, this dividend payer stock may become more convenient either to start or to increase a position as P/E ratio lowers and the dividend yield increases.
General Mills distributes an annual dividend of $1.96 per share – through quarterly payments of 49 cents – for a dividend yield of 3.56%.
Disclosure: I have no position in General Mills.
