General Mills Earnings Preview: Marginal Sales Growth Expected

General Mills

is set to report fourth-quarter fiscal 2011 results tomorrow, June 29, before the markets open. The report should offer a look at where things stand in terms of the cost of food and transportation. Analysts are looking for the maker of Wheaties and Lucky Charms to report quarterly earnings of $0.52 per share on revenues of $3.7 billion. That is up from $0.41 per share and $3.6 billion in the same period of last year. Full-year earnings are anticipated to have risen 7.3% from a year ago to $2.48 per share, while revenues will be up marginally to $14.9 billion. The forecast is in line with the company's guidance that was reaffirmed two weeks ago.

Minneapolis-based General Mills manufactures and markets branded consumer foods worldwide, as well as supplying branded and unbranded food products to the foodservice and commercial baking industries. Its brands also include Cheerios, Haagen-Dazs, Pillsbury and Progresso. During the three months that ended in May, General Mills partnered with Groupon and also announced the pending acquisition of a controlling stake in yogurt maker Yoplait.

Analysts so far expect to see sequential and year-over-year growth of earnings and revenue in the current quarter. Note that analyst estimates of per-share earnings have been within a few cents of results in the past five quarters; the consensus EPS forecast was on the money in the third quarter.

The dividend yield is 3.0% and the return on equity is 27.3%. The price-to-earnings ratio is much less than the food and beverage industry average. Analysts on average recommend buying GIS, and they have for more than 90 days. Their mean price target (where they expect the stock is headed) is currently $41.25 per share. The share price ended Monday at $37.25, after falling nearly 5% in the past month. Still, the stock has outperformed the broader markets since the beginning of the year, even if it has not kept up with rival Kellogg

in that time.