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General Mills Can Still Satisfy (Earnings Preview)

This means that even amid periods of sluggishness, management has never lost focus of the core business. With the likes of Kellogg (K) and Post Holdings (POST) expanding into new product categories, it's impressive that General Mills still found ways to grow margins and make efficiency improvements.

What's more, management expected to grow operating margin in each of the company's three business segments, which includes U.S. Retail, Bakeries and Foodservice International.

Of the three segments, the question mark continues to be with U.S. retail operations. Sales declined in 1% December to $2.97 billion, making up the majority of reported revenue. But revenue have been under pressure due to low volumes.

It is encouraging that international sales remain a steady source of growth, about 2% revenue growth to $1.40 billion. Revenue were driven by solid pricing and volume growth. Here again, the slightly better results last quarter were offset by an impact of 3% in currency adjustments.

So for this and other reasons, management remains optimistic the company can achieve its long-term growth plan. Along with mid-single-digit growth in segment operating profit, management expects strong improvement in adjusted gross margin for fiscal 2014.

Meanwhile, the company said it expects to post double-digit growth in adjusted per-share earnings for the fiscal fourth quarter. The company added the expected rate of input cost growth, the quarterly tax rate and the average number of the company's shares outstanding will be "well below" levels in the same period in the previous year.

With shares trading around $50, I don't see anything that should prevent General Mills from reaching $60 per share some time in the second half of the year. Given the strong growth momentum the company enjoys in international markets, this should benefit the company's cash flow and its ability to increase the dividends and continue its share buyback plan.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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