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General Mills Thrashes Out Decent Quarter


Ups guidance despite rising costs.

A great deal has been written about how food companies are getting hit by higher costs. And while that's true, General Mills (GIS), known for its Cheerios and Betty Crocker brands, released some encouraging first-quarter results.

In the period ended August 24th, the company earned $278.5 million, or $0.79 per share. That was just south of the $288.9 million or $0.81 per share it turned in during the same period last year. However, excluding a reduction, earnings rose 19% to $0.96 per share - good news, because the Street was reportedly looking for just $0.87.

Its top line was solid too. General Mills reported first-quarter revenue of roughly $3.5 billion. And that's good news because it's a 13.8% jump over what it reported in the comparable quarter last year. It was also north of the roughly $3.3 billion the sell side had apparently been looking for.

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According to the release not counting a gain on the sale of a business, "and assuming no mark-to-market impact in fiscal 2009, the company updated its earnings guidance to a range of $3.81 to $3.85 per share." On the downside, its cost of sales rose 20.3%, to about $2.3 billion. That's big, and it does temper my enthusiasm a bit.

Folks, that is up from the $3.78 to $3.83 it offered up in conjunction with its fourth-quarter results back in June. It's also essentially in line with the current estimate of $3.84 a share. Finally, I think it's interesting that the company upped its guidance so early on in the year - it's a sign of confidence to me.In short, I think that this was a solid quarter. I believe the results could lead to some positive research in the days ahead, and institutions looking for a play in this space could perhaps warm to the story.

General Mills closed at $69.74, up $1.19 or 1.74%.
No positions in stocks mentioned.

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