General Mills (NYSE: GIS) and Micron Technology (NASDAQ: MU) are two stocks part of the S&P 500 Index that are expected to report their quarterly earnings this week. According to the earnings calendar, both companies are expected to announce their quarterly earnings on June 30. Let’s take a look to see what investors can expect from these S&P 500 companies right now.
General Mills revenue is forecast at $4.36 billion
General Mills manufactures and markets branded consumer foods worldwide. It has five business segments that include North America Retail, Convenience Stores & Foodservice, Europe & Australia, Asia & Latin America, and Pet.
Wall Street expects company sales to fall by 13.2% year over year to $4.36 billion in Q4 of fiscal 2021 while earnings decline is forecast at 23.6%. This suggests that the company’s revenue will grow by 1.7% to $17.93 billion and earnings will rise by 3.3% to $3.73 per share in fiscal 2021 ended in May.
In fiscal Q3, General Mills saw its top-line increase by 8% while analysts expected sales to rise by 6% year over year. The company’s management attributed the acceleration in Q3 revenue growth to the trend of people continued to spend time cooking at home rather than going out for a bite amid the pandemic.
It saw several brands continue to gain momentum such as its Cheerios cereal as well as the Totino’s frozen pizza franchise and its baking brand- Pilsbury. A combination of sales growth and rising prices allowed General Mills to increase net earnings by 31% to $596 million. In the last three quarter's the company’s sales rose 8% while net income grew 14% year over year. Its operating cash flow also rose 2% in this period.
However, investors are worried about the company’s high debt levels which have meant General Mills has not been able to move the dividend growth needle in the last three years. GIS stock has also grossly underperformed the markets over the long term. In the last 10-years, General Mills has returned 124.4% compared to the S&P 500 gains of 306%.
However, its an ideal stock for investors with a lower risk appetite as it has a beta of just 0.55. Comparatively, GIS stock provides investors with a forward yield of 3.4% compared to the forward yield of 1.33% for the S&P 500.
Micron sales forecast to rise by 36% in fiscal Q3
Micron Technology designs, manufactures, and sells memory and storage products worldwide. The company operates through four segments that are compute and networking, mobile, storage, and embedded business units. It offers memory and storage technologies, including DRAM, NAND, NOR, and 3D XPoint memory under the Micron and Crucial brands, as well as through private labels. The company provides memory products for the cloud server, enterprise, client, graphics, and networking markets, as well as for smartphone and other mobile-device markets.
Analysts covering Micron expect sales in the fiscal third quarter of 2021 to rise by 36% to $7.22 billion while earnings are estimated to more than double to $1.7 per share.
Unlike General Mills, Micron has absolutely crushed the S&P 500, gaining over 1000% in the last 10 years. Despite these stellar gains MU stock is trading at a forward price to fiscal 2021 earnings of 15x which is extremely steep as Wall Street forecasts earnings to rise at an annual rate of 64% in the next five years.
Micron has multiple secular tailwinds that will positively impact its revenue and earnings going forward. The upcoming transition towards 5G smartphone will drive its mobile business unit sales higher which currently accounts for 29% of total revenue. Further, according to a report from Global Market Insights, the memory market is forecast to rise at an annual rate of 14% through 2026.
Analysts have a 12-month average target price of $118 for Micron which is 40% above the current trading price.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
