Monday, December 20, 2010

General Mills (NYSE:GIS) Could Win if they Miss

As it looks like it'll be difficult for General Mills (NYSE:GIS) to meet full year EPS estimates, as they struggled, along with other food companies in the first half of the year.

Barclays (NYSE:BCS) believes that even if they miss, if they they do well in the second half it could be considered positive going forward based on the low sentiment around the overall sector.

Barclays said, "GIS has officially joined the long list of fiscal year-end food companies that have posted somewhat challenged fiscal 1H results and now look for a dramatic step up in earnings growth rates to meet full year expectations. For example, GIS, after a slight decline in F1H EPS YOY, will need to generate a - 20% YOY gain in F2H11 in order to meet consensus EPS estimates for the full year (the high-end of management's guidance)."

"...Still, if full year estimates prove to be overly optimistic for the fiscal year names, we expect that investors are likely to see a sequential acceleration in YOY EPS growth from here, which may well be viewed positively, given the more dire sentiment around the group of late."

Barclays maintains an "Overweight" on General Mills, which closed Friday at $36.38, down $0.21, or 0.57 percent. They have a price target of $38.50 on them.

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