General Mills Unveils 50 Snack Products, Just in Time for Earnings

NEW YORK (TheStreet) -- Just in time for reporting its earnings, General Mills (GIS) , the maker of Cheerios cereal and Yoplait yogurt, announced it will launch 50 new products in the second half of fiscal year 2015.

The Minneapolis company reports fiscal second-quarter results Wednesday. Shares are up over 1% today and over 4% for the year to date.

Jeff Harmening, executive vice president and chief operating officer, U.S. retail, said in a statement that starting in January General Mills will focus on meeting consumer demand for "better for you" snacks. That means snacks that have added protein, are gluten-free and made with simple ingredients.

The change comes at a time when the packaged food industry is suffering from a shift in consumer demand and spending.

If successful, those snacks will be better for the 90-year-old company's bottom line, too. 

It hasn't been a great year for General Mills, which announced two rounds of layoffs in the past two months to combat slumping sales and declining profits. In October, General Mills said it will eliminate 700 to 800 jobs for expected cost savings of approximately $125 million to $150 million starting in fiscal 2016.

Despite being up on the year, the shares trail the 8.6% gain in the S&P 500 and the 4.6% gain in the Dow Jones Industrial Average. Considering the 18.43% gain in the packaged food sector, according to Morningstar, General Mills stock is still wanting.

The chart below shows how erratic General Mills shares have been in 2014 compared to the Dow Jones U.S. Food & Beverage Index. 

GIS Chart
GIS data by YCharts

These shares still have a high analyst 12-month price target of $58, which suggests gains of 12.6%. And remember, while General Mills works to rebuild its brand and adjust to new consumer tastes and a struggling industry it's still paying a strong dividend yield of 3.20%.

In addition, the company picked off organic and natural food producer Annie's (BNNY) . General Mills wants to capitalize on the growth potential in natural and organic foods. It's a sound strategy that's already being used by rivals Kraft (KRFT) and Campbell Soup (CPB) .

If General Mills can extract value from Annie's, improve its margins and grow market share from its new products, its shares should do well in 2015.

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TheStreet Ratings team rates GENERAL MILLS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL MILLS INC (GIS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: GIS Ratings Report

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. At the time of publication, the author held no positions in any of the stocks mentioned.

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