Why General Mills Stock Jumped Today
Key Points
General Mills is offsetting sluggish sales by improving its operating cost structure.
Management is targeting $3 billion in savings by 2030.
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Shares of General Mills (NYSE: GIS) rallied on Wednesday after the cereal and snack food maker's profits exceeded investors' expectations.
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Strengthening profitability
General Mills' net sales increased 1% to $4.6 billion in its fiscal 2026 fourth quarter, which ended on May 31. The company's organic sales, which strip out the effects of acquisitions and divestitures, were flat year over year.
The maker of Cheerios and Cinnamon Toast Crunch saw its adjusted gross margin improve by 1.5 percentage points to 34.2%, driven by higher net prices. That contributed to a 13% jump in adjusted operating profit to $705 million.
All told, General Mills' adjusted earnings per share, which were boosted by stock buybacks, surged 27% to $0.95. That topped Wall Street's estimates, which had called for per-share profits of $0.80.
Challenges persist
For fiscal 2027, management warned of a difficult consumer environment, with organic net sales to be down 1.5% to up 0.5% and adjusted operating profit down 8% to 13%.
To win more sales, General Mills plans to create new products to cater to health-conscious shoppers, including foods with higher protein and fiber.
The company also intends to slash costs by $750 million in 2027 and a total of $3 billion by fiscal 2030.
"We are laser focused on increasing our efficiency to help offset elevated inflation, fund our growth investments, and generate stronger earnings and cash flow," CEO Jeff Harmening said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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