General Mills (GIS) Stock Can Do Better As The Food Manufacturer Facing Slow Down But Not Decline

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The results for the second quarter of fiscal year 2021 were announced by General Mills Inc. (GIS), which makes rice goods, breakfast cereals and snacks. Revenue growth has slowed marginally, as seen in the results, but management does not see any signs of a revenue downturn.

General Mills saw revenue growth of 16 percent in the first quarter, attributable to the advent of the height of the COVID-19 pandemic in the United States and serious retail restrictions. However, although sales slowed in the second quarter, it was still at a high pace – plus 7 percent year-on-year. The business notices the strong demand for baking goods, yoghurt and cereals in the retail trade. Furthermore, last year, the pet food category reported good sales. Good retail profits were sufficient to mitigate a devastating downturn in food service businesses that were closed or reduced during the pandemic.

Thanks to a healthy mix between rising sales volumes and higher costs, General Mills’ gross profit margin steadily improved in the second quarter. The adjusted operating margin stayed unchanged and helped rise 9 percent in adjusted earnings per share.

General Mills reports and feels relaxed in this situation regarding the stability of market demand. Management predicts the demand for snacks and breakfast items will begin to grow with the pandemic. It will also raise operating profit, and General Mills expects that margins will be stable.

Thus, General Mills is showing exceptionally strong sales for the second quarter in a row. The firm reports that it has been able to draw buyers from new age groups over the last few months and expects that many of these customers will stick with the brands of the business even after the pandemic.

General Mills, Inc. (GIS) stock fell a bit by -1% to close the trading at $58.56 on Wednesday.

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