Shares of General Mills (GIS) are closing in on a new fifty two week high after reporting strong first quarter results. Trading currently has shares at $40.11, just off a fifty two week high of 41.06. Shares are actually trading down in 2012 by under 1%.
General Mills saw net sales increase 5% in the first quarter to $4.05 billion. Analysts were hoping to see higher numbers, with a target on Yahoo Finance of $4.08 billion. Earnings per share were $0.82, but adjusted to $0.66 after one-time items were taken out. Analysts were hoping for $0.63 in first quarter earnings.
Strong results were led by new products and acquisitions. General Mills launched over 100 new products in the first quarter including: Apple Cinnamon Chex, Nature Valley Protein Bars, Green Giant Steamers, and Progresso cooking sauces. The first quarter results included two months of Yoplait International sales, and also included three months worth of sales from newly acquired brands: Food Should Taste Good, Yoplait Ireland, and Parampara Foods. I wrote about Food Should Taste Good in a previous article, and think that it is setting up General Mills healthier food division for future success with a focus on gluten free products.
Sales by region:
· United States Retail: $2.49 billion, -1%
· International: $1.09 billion, +27% year over year, +36% on a constant currency basis
· Bakeries/Foodservice: $472 million, -2%
· Joint Ventures: $23 million
Internationally, the company saw its operating profit increase 10% to $126 million. Strong results were experience in many of the companies regions including (on a constant currency basis):
· Europe: +51%
· Canada: +28%
· Latin America: +20%
· Asia/Pacific: +20%
Another way to play the success of General Mills is the Powershares Dynamic Food & Beverage ETF (PBJ). General Mills is one of the largest holdings of the ETF, making up 5% of assets. The company currently is the fifth largest holding. As demand for food products goes up with our growing world population, an ETF like this could be a perfect one to buy and hold in a retirement account and forget about.
General Mills bought back seven million shares of its stock at a cost of $272 million. This would represent an average purchase price of $38.86. The company also recently raised its dividend payout to a quarterly amount of $0.33. Both of these results show how General Mills is returning profits to shareholders.
General Mills continues to back its full year outlook for the current fiscal year. The company is going full force with advertising campaigns that will support new product launches. Internationally, the company is focusing its advertising on Yoplait, its newly acquired brand. The company sees earnings per share of $2.65 in the current fiscal year. This target does not factor in its recent acquisition of Yoki, and in my opinion is conservatively valuing sales from Yoplait. In my last General Mills article, I mentioned both of these items and recommended buying shares as they approached new fifty two week lows. With shares now on the other end of the year range, it's time to sit back and wait for a drop. This is a fantastic company that is growing through new products and acquisitions that should be purchased for the long term.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.