General Mills, Inc. (GIS) posted its second quarter earnings on Wednesday, December 18. The company’s stock fell about 4% despite exceeding revenue expectations for the quarter.

Net sales totaled $5.24 billion for the quarter, up 2% from $5.14 billion one year ago. Quarterly revenue beat analysts’ estimates of $5.14 billion.

“We made important progress accelerating our volume growth and market share trends in the first half of the year, including returning our North America Pet business to growth,” said General Mills CEO, Jeff Harmening. “To achieve and build on these enterprise-wide gains, we have made incremental investments to bring consumers greater value. Amidst a dynamic external environment, I am not only confident in our plans, but especially our teams, who are operating with agility and doing what is right for our consumers.”

The company reported net income of $795.7 million or $1.42 per adjusted share for the quarter. This was up from $595.5 million or $1.02 per adjusted share during the same quarter last year.

General Mills reported that operating profit increased 33% to $1.08 billion for the quarter. In the second quarter, General Mills reported $3.32 billion in net sales for its North America Retail segment, which was relatively unchanged from the year prior. The North America Pet segment increased 5% to $595.8 million during the quarter. The company’s International segment increased 1% to $690.6 million in net sales. For fiscal 2025, the company anticipates organic sales to be between flat and 1% year-over-year.

General Mills, Inc. (GIS) shares ended the week at $63.61, down 5% for the week.

Paychex Quarterly Report

Paychex, Inc., (PAYX) released its second quarter earnings on Thursday, December 19. The payroll service provider reported increased revenue, causing its shares to rise by almost 3% following the release of the report.

For the quarter, the company reported total revenue of $1.32 billion. This was up 5% from $1.26 billion in the same quarter last year and was in line with analysts' expectations.

“We are pleased to report strong financial results for the second quarter of fiscal 2025 with a 5% increase in total revenue,” said Paychex CEO, John Gibson. “The demand for our comprehensive suite of solutions remains solid as we head into the selling season with a new set of award-winning solutions tailored to meet the unique needs of small and medium-sized businesses. In the face of challenging labor market conditions and rising healthcare and benefits costs, many businesses are reevaluating their HR strategies as we head into the new year.”

Paychex posted net income of $413.4 million or $1.14 per adjusted share for the quarter. This was up from net income of $392.7 million or $1.08 per adjusted share this time last year.

The Rochester, New York-based company saw an increase in revenue across all service segments. Professional Employer Organization (PEO) and Insurance Solutions revenue increased 7% to $317.9 million for the quarter. Management Solutions revenue rose 3% to $962.9 million for the second quarter, which was attributed to growth in client numbers, higher product penetration in Human Resource and Retirement Services, offset by lower ancillary service revenue. The company affirmed its outlook for fiscal 2025 and expects adjusted diluted earnings per share to increase 5% to 7%.

Paychex, Inc., (PAYX) shares closed at $139.54, down 2% for the week.

Darden Restaurants Serves Up Earnings

Darden Restaurants, Inc. (DRI) posted its second quarter earnings report on Thursday, December 19. The parent company of restaurants such as Olive Garden, LongHorn Steakhouse and The Capital Grille saw its stock rise 13% in early morning trading.

Revenue came in at $2.89 billion for the second quarter. This was up 6% from $2.73 billion recorded during the same quarter last year and just above analysts’ expectations of $2.86 billion.

"We had a strong quarter and I am pleased that our four largest brands – Olive Garden, LongHorn Steakhouse, Yard House and Cheddar's Scratch Kitchen – generated positive same-restaurant sales, as did three of our four business segments," said Darden CEO, Rick Cardenas. "I continue to believe in the power of our strategy and our brands' ability to compete effectively regardless of the environment. Each of our brand leadership teams are focused on the long term and staying committed to executing at the highest level."

The company reported net income of $215.1 million or $1.82 per adjusted share. Last year at this time, Darden posted net income of $212.1 million or $1.76 per adjusted share.

Darden’s same store sales increased across most of its brands in the quarter. Olive Garden saw a rise in same-store sales of 2%. The Fine Dining segment, which includes restaurants such as The Capital Grille, saw same-store sales decline 5.8%. LongHorn Steakhouse, a strong breadwinner for Darden, experienced a 7.5% increase in same-store sales. Darden declared a dividend of $1.40 per share of common stock, payable on February 3, 2025, to the stockholders of record on January 10, 2025.

Darden Restaurants, Inc. (DRI) shares ended the week at $187.59, up 13% for the week.

The Dow started the week of 12/16 at 43,826 and closed at 42,840 on 12/20. The S&P 500 started the week at 6,064 and ended at 5,931. The NASDAQ started the week at 20,016 and finished at 19,573.

U.S. Treasury yields rose mid-week after the Federal Reserve’s announcement of its latest interest rate cut and indication that fewer cuts are expected next year. Yields continued to increase towards the end of the week after jobless claims dipped more than expected.

On Wednesday, the Federal Reserve lowered interest rates by a quarter percentage point to a range of 4.25% to 4.5%. This marks the Federal Reserve's third consecutive rate cut of the year, with rates having decreased by a full percentage point since September. Although rates were reduced, the Federal Reserve anticipates only two rate cuts in 2025.

“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” said Federal Reserve Chairman, Jerome Powell. “We can therefore be more cautious as we consider further adjustments to our policy rate.”

The benchmark 10-year Treasury note yield opened the week of December 16 at 4.40% and traded as high as 4.53% on Wednesday. The 30-year Treasury bond opened the week at 4.60% and traded as high as 4.69% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 22,000 to 220,000 for the week ending December 14. Continuing claims decreased by 5,000 to 1.87 million.

“With the final [third-quarter] GDP estimate revised higher and jobless claims dropping after last week’s jump, this morning simply reinforces the strong U.S. economic picture,’' said chief economic strategist at Morgan Stanley Wealth Management, Ellen Zentner.

The 10-year Treasury note yield finished the week of 12/16 at 4.52%, while the 30-year Treasury note yield finished the week at 4.72%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 19. The survey showed mortgage rates rising heading into the holidays.

This week, the 30-year fixed rate mortgage averaged 6.72%, up from last week’s average of 6.60%. Last year at this time, the 30-year fixed rate mortgage averaged 6.67 %.

The 15-year fixed rate mortgage averaged 5.92% this week, up from last week’s 5.84%. During the same week last year, the 15-year fixed rate mortgage averaged 5.95%.

“This week, mortgage rates crept up to a similar average as this time in 2023,” said Freddie Mac’s Chief Economist, Sam Khater. “For the most part, mortgage rates have moved between 6% and 7% over the last 12 months. Homebuyers are slowly digesting these higher rates and are gradually willing to move forward with buying a home, resulting in additional purchase activity.”

Based on published national averages, the savings rate was 0.42% as of 12/16. The one-year CD averaged 1.83%.

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