General Mills, Inc. GIS is likely to register top-line growth when it reports second-quarter fiscal 2025 earnings on Dec. 18. The Zacks Consensus Estimate for revenues is pegged at $5.16 billion, implying a 0.4% increase from the prior-year quarter’s reported figure. The consensus mark for earnings has remained unchanged in the past 30 days at $1.22 per share, indicating a 2.4% decline from the figure reported in the year-ago period. GIS has a trailing four-quarter earnings surprise of 6.3%, on average.

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Factors Likely to Influence GIS’ Upcoming Results

The current consumer trends reveal a challenging landscape where persistent inflation, value-driven purchasing behavior, heightened competition and regional economic instability present considerable obstacles to General Mills’ growth prospects.  Across core markets, consumers are increasingly opting for lower-cost options due to persistent inflation, which has affected consumer confidence and spending capacity. 

This heightened focus on value has introduced a significant constraint for General Mills, as consumers are becoming more resistant to price increases. These headwinds highlight potential vulnerabilities for the company for the quarter under review.

While General Mills has implemented measures to control costs through its Holistic Margin Management strategy, cost inflation remains a concern. The company expects input cost inflation to be 3-4% of the cost of goods sold in fiscal 2025. Apart from this, brand-building investments, while crucial for growth, are likely to affect the company’s margins in the short run. Our model suggests a 40-bps contraction in the adjusted operating margin to 18.9% in the second quarter. 

However, General Mills has been benefiting from the strength of its brands and focus on its Accelerate strategy. The Accelerate strategy is based on four pillars that include building brands, undertaking constant innovation, leveraging scale and standing for good. The company continues to focus on core markets, global platforms and local gem brands with growth prospects. Apart from this, General Mills’ Pet segment displays robust growth potential due to its high consumer demand, premium brand positioning, and strategic investments in innovation and brand communication. These factors are likely to have acted as upsides in the quarter under review.

Earnings Whispers for GIS

Our proven model doesn’t conclusively predict an earnings beat for General Mills this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

General Mills carries a Zacks Rank #3 and has an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Some Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Tyson Foods TSN currently has an Earnings ESP of +1.92% and a Zacks Rank of 2. The company is likely to register top-and bottom-line growth when it reports first-quarter fiscal 2025 numbers. The Zacks Consensus Estimate for Tyson Foods’ quarterly revenues is pegged at $13.5 billion, indicating a growth of 1.2% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tyson Foods’ quarterly earnings of 78 cents suggests an improvement from 69 cents reported in the year-ago quarter. TSN has a trailing four-quarter negative earnings surprise of 57%, on average.

The Simply Good Foods Company SMPL currently has an Earnings ESP of +5.50% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at 46 cents, which implies a 7% increase year over year.

The Zacks Consensus Estimate for The Simply Good Foods Company’s quarterly revenues is pegged at $348.1 million, which indicates growth of 12.8% from the figure reported in the prior-year quarter. SMPL has a trailing four-quarter earnings surprise of 5.3%, on average.

Grocery Outlet Holding GO currently has an Earnings ESP of +2.00% and a Zacks Rank of 3. The company is likely to register a decrease in the bottom line when it reports fourth-quarter 2024 numbers. The Zacks Consensus Estimate for the quarterly earnings per share is pegged at 17 cents, down 5.6% from the year-ago period.

Grocery Outlet's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.09 billion, which suggests an increase of 9.7% from the prior-year quarter. GO has a trailing four-quarter negative earnings surprise of 2.2%, on average.

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