General Mills Inc. (GIS, Financial) will report its financial results for the fourth quarter of fiscal 2018 before the opening bell on Wednesday, June 27.
For the quarter in question consensus is for an adjusted net profit of 73 cents per share, which is flat compared to a year ago. The mean is a result of 18 estimates that range between a low of 67 cents and a high of 82 cents.
Estimates on earnings are backed on sales which are projected to $3.8 billion. That represents a 0.1% decline from the comparable of fiscal 2017. Estimates on last quarter revenues range between a low of $2.49 billion and a high of $3.94 billion.
On Wednesday the company will also update shareholders with earnings and sales for the entire year of 2018. Consensus is for adjusted net earnings of $3.04 per share, four cents lower than 2017, on a yearly revenue of $15.75 billion. In 2017, General Mills reported a revenue of $15.62 billion.
A bit of history tells that the company's revenue declined 1.6% on average over the last five years while diluted earnings per share grew 1.3% on average over the same span of time. This can be easily picked from the below charts powered by GuruFocus.
The chart below illustrates the trend in General Mills’ yearly sales over the last 30 years:
The chart below depicts the trend in General Mills’ yearly diluted earnings per share over the last 30 years:
GuruFocus assigns General Mills a profitability & growth rating of 7 out of 10.
Looking ahead, from fiscal 2018 to fiscal 2019, analysts expect General Mills' earnings to grow 2.3%. Over the next five years, earnings are expected to grow 5.83% per annum. Revenues are instead projected to $17.41 billion in full fiscal 2019 and $17.75 in full fiscal 2020.
As of the third quarter of fiscal 2018, General Mills has approximately $953.1 million in cash on hand and securities, or $1.67 per share. The total debt amounts to $9.62 billion for a total debt to equity ratio of 194% versus an industry median of 49%. This means General Mills’ balance sheet is more leveraged than the industry. With an interest coverage ratio of 8.46, however, the company doesn't encounter any problem in paying interest expenses on the outstanding debt.
As of Feb. 25, General Mills’ total assets and total liabilities were valued at $22.24 billion and $16.46 billion. Total current assets are valued at $4.277 billion and current liabilities are valued at $6.21 billion, for a total current ratio of 0.69 versus an industry median of 1.61. This means that the company is less capable than its peers of generating the financial resources to meet its financial obligations.
GuruFocus assigns General Mills a financial strength rating of 5 out of 10.
Over the trailing 12 months, General Mills generated approximately $2.79 billion from its operations. Approximately 70% of the operating cash flow was levered free cash flow.
The company used its levered free cash flow for business growth purposes and to pay dividends to its shareholders. The quarterly dividend of 49 cents per share led to a forward annual dividend of $1.98 yielding 4.31%.
General Mills is currently trading around $45.2 per share. The stock is down 24% this year and has a market capitalization of $25.8 billion. The price-book ratio is 5.19 versus an industry median of 1.7, the price-sales ratio is 1.68 versus an industry median of 1.06 and the price-earnings ratio is 12.07 versus an industry median of 20.69.
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Other indicators on General Mills show that the stock's 52-week range is $41.01 to $60.69, and the forward price-earnings ratio is 14.56 versus an industry median of 19.34.
According to the Peter Lynch chart powered by GuruFocus, the share price is below the Peter Lynch Earnings Line (P/E = 15) of $56.1 per share and the Price at Med P/E without NRI (P/E = 18.14) of $67.9 per share.
Disclosure: I don't hold any position in General Mills.
