General Mills Second Quarter Earnings Preview

General Mills (NYSE:GIS) is short of its 52-week high of $41.62 per share by 13 cents and the company will report its second quarter earnings on Wednesday, December 19, 2012.



Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: Everything Investors Need To Know About Earnings

What to Expect: Analysts are expecting General Mills to report earnings of 79 cents per share, up 3.9% from a year ago, when the company reported earnings of 76 cents per share.

The consensus estimate is down from 80 cents three months ago, but it hasn't changed in the last month. Analysts are projecting earnings of $2.66 per share for the fiscal year.

General Mills is expected to report revenue of $4.88 billion for the quarter, beating last year's figure of $4.62 billion by 5.5%. Revenue for the fiscal year is expected to come in at $17.76 billion.



Company Performance: In the past four quarters, revenue has shown consistent year-over-year growth. It increased 5.3% to $4.05 billion in the first quarter. Prior to that, the figure rose 11.9% in the fourth quarter of the last fiscal year, 13% in the third quarter of the last fiscal year and 13.7% in the second quarter of the last fiscal year.

P/E ratio for GIS is 16.1. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator



The stock price has increased from $38.96 on September 17, 2012 to $41.49 over the past quarter. The stock price is at its 52-week high right now. General Mills' stock price is currently in the middle of a rising streak. The stock has risen $1.01 per share since December 3, 2012.





The Competition: General Mills is a manufacturer and marketer of branded consumer foods sold through retail stores. It also supplies branded and unbranded food products to the food service and commercial baking industries. The majority of analysts (12 of 17) rate General Mills a buy. Opinion about the stock has worsened recently, as buy ratings have dropped slightly over the last three months.

The company's closest competitor in the food processing industry is Kellogg (K). Analysts are more optimistic about General Mills than about Kellogg. Only three out of 19 analysts rate the latter a buy.