General Mills stock rises on positive Q3 earnings results

Shares of General Mills (GIS) are moving higher Wednesday morning as the food company beat fiscal third-quarter earnings estimates, which revealed $5.09 billion in revenue against an expected $4.98 billion. The report also disclosed gains of $1.17 adjusted earnings per share against an expected $1.05 per share. In addition, while the company saw a slight decrease in net sales for the quarter, it did see a 25% increase in its operating profits for the third quarter.

Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest development for General Mills and what it could mean for the company moving forward.

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

- General Mills, now the stock is moving to the upside here this morning up just about 5%. They beat on revenue. They also reaffirmed their full year 2024 guidance. Now the Cheerios maker saying that cost savings and also price hikes helped profits move to the upside here during their fiscal third quarter. They also though noted that it's keeping a close eye on the economy and what they're seeing from the consumer, persistent inflation, also supply chain stability, are just some of the factors that General Mills is warning could impact future performance.

But when you take a look at the recent numbers that we were just getting out here from General Mills, the revenue beat was supported here by favorable weather is what they said. Also, growth in some of their non-measured channels and cost savings that do remain robust in terms of the Street's reaction. Mizuho, one of the analysts chiming in saying, that this was actually a positive surprise here for General Mills, but Brad, the question is exactly what General Mills laid out in their earnings call, is just the uncertainty about the macroeconomic backdrop over the next several months and exactly the power of the consumer, the purchasing power, where that is going to fall is critical here for General Mills and so many of its competitors.

- Yeah, I think you're spot on here. And I think looking at the segments, particularly, that's immediately where my eyes went when I looked at this report. I turned to my right, to one of our top producers, Sydney, and I said, look at the segments here. You've got declines across North America retail, across pet, across North America. Well, food service was flat. International, that was down four points here. So essentially, volumes were down, but they increased price.

And so that was one of the elements here that really stuck out to me. How long are they going to be able to input more price into the system with some of the macro headwinds that you just cited. And that is the larger question.

- Yeah, it is. And we've already started to see some backlash from some of the competitors out there. People simply are not buying as much. They can't afford it because of persistent inflation. So some of the volume growth has been hurt, just a bit. But again, how much more they are able to offset the increase in the input costs with higher prices and the fact that consumers are still willing to pay. Some of these consumer staples are getting a little expensive.

- Did you have a favorite cereal growing up?

- Um, I would have to say Cinnamon Toast Crunch.

- Oh, done deal. All right. Cool.

- Maybe Fruit Loops.

- Yeah.

- Lucky Charms.

- It's a good day when you get a Cinnamon Toast Crunch shout out. Sydney got a shout out even though she's still trying to make [? bittercoin ?] work. We'll workshop that.