General Mills (NYSE:GIS) announced third-quarter results that beat analysts’ expectations on Wednesday and posted sales in line with forecasts.

Demand for Groceries is Still High

The maker of cereal, snack bar, and pet food raised its full-year sales and profit forecast, encouraged by higher prices and strong demand for its products. The surge in demand for groceries due to the pandemic has continued, boosting General Mills sales as people cook more at home at a time when restaurants have hiked menu prices to offset the inflation.

General Mills Chairman and CEO Jeff Harmening said: “Our solid execution in a highly volatile environment enabled us to close the third quarter with improved momentum. Demand for our brands remains robust, and our team has shown great agility to overcome disruptions throughout the supply chain and deliver for our customers and consumers. We expect to drive strong growth in the fourth quarter, fueled by accelerating net price realization. With confidence in our plans and positive momentum on our business, we’re raising our guidance for fiscal 2022.”

General Mills now expects organic net sales to grow approximately 5% in fiscal 2022. It previously forecast annual organic sales to increase 4-5%.

The company expects adjusted earnings per share to be between flat and a 2% increase, compared to its prior range of a 2% decline to a 1% increase. 

General Mills reported third-quarter adjusted earnings of $0.84 per share, higher than analysts’ expectation of $0.78, according to FactSet. Revenue of $4.5 billion is in line with analyst estimates and prior-year results.

General Mills recently acquired Tyson’s pet treats business and spun off its European Yoplait business.

The company expects changes in consumer behavior driven by the COVID-19 pandemic to drive continued increases in consumer demand for food from home, compared to pre-pandemic levels.

Sustained demand, coupled with widespread price increases, has helped packaged food peers including Kraft Heinz, Kellogg, and Conagra Brands beat earnings forecasts in recent months.

General Mills Stock Jumps 

General Mills shares rose 3.6% to $64.96 in morning trading on Wednesday. Year-to-date, shares are down more than 4%, above the performance of the S&P 500 which is down nearly 7% year-to-date. General Mills is one of the top consumer staples stocks to buy now.