The stock's forward price-to-earnings ratio of 20.3 comes in just below the S&P 500 consumer staples sector average of 20.9. While certainly not a downright bargain, any discount for a blue-chip stock like General Mills shouldn't be taken for granted. This is what makes the stock such a compelling buy at current levels.
General Mills' (GIS 0.59%) stock rose to an all-time high on June 30 after the company posted its fourth-quarter earnings report. The packaged food giant's revenue rose 8% year over year to $4.89 billion, which beat analysts' estimates by $80 million, as its organic sales improved 13%. Its adjusted earnings increased 23% in constant currency terms to $1.12 per share, which also easily cleared the consensus forecast by 11 cents.
Those numbers probably wouldn't have impressed investors in a bull market, but they certainly look attractive in a bear market that favors defensive plays over pricier growth stocks. That's why General Mills' stock rose more than 10% this year as the S&P 500 declined about 20%.
General Mills continued to grow through those downturns because sales of consumer staples generally stay consistent throughout tougher times. It also repeatedly expanded by buying smaller brands, streamlined its business by divesting its weaker brands, and refreshed its classic brands with newer variations like Blueberry Cheerios and Yoplait Go-GURT.
That slow and steady growth enabled General Mills to generate a total return of 1,290% over the past 30 years after factoring in reinvested dividends. Past performance doesn't guarantee future gains, but its stable growth will likely continue for decades to come. That's why investors flocked to the stock as rising rates crushed the market's higher-growth stocks.
Those confident buyback plans indicate General Mills believes its own shares are still undervalued. Its stock trades at 19 times forward earnings, which only makes it slightly pricier than those of industry peers like Kellogg (K 0.45%) and Kraft Heinz (KHC -0.44%), which trade at 18 and 14 times forward earnings, respectively. Kellogg and Kraft are also considered defensive plays, and both stocks have generated positive returns in this tough market this year.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Kraft Heinz and recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
Our Direct Stock Purchase Plan provides a convenient and economical way to invest in General Mills stock. You can increase your ownership over time through purchases of common stock and the reinvestment of cash dividends, without paying brokerage commissions and other fees on your purchases and reinvestments.
In the past three months, General Mills insiders have sold more of their company's stock than they have bought. Specifically, they have bought $0.00 in company stock and sold $4,078,559.00 in company stock.
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In recent months, General Mills' (NYSE:GIS) share price had some problems and has not been able to keep up with the market's performance. This year, the return is even negative at minus 1.3 percent, while broad indices such as the Dow Jones and the S&P 500 have outperformed the stock. Even General Mills' competitors have performed better overall than the Golden Valley company.
On the downside, the stock finds support just below today's level from accumulated volume at $80.16 and $79.79. There is a natural risk involved when a stock is testing a support level, since if this is broken, the stock then may fall to the next support level. In this case, General Mills Inc finds support just below today's level at $80.16. If this is broken, then the next support from accumulated volume will be at $79.79 and $75.90.
This stock has average movements during the day and with good trading volume, the risk is considered to be medium. During the last day, the stock moved $0.685 between high and low, or 0.81%. For the last week, the stock has had daily average volatility of 1.29%.
The General Mills Inc stock is overbought on RSI14 and lies in the upper part of the trend. Normally this may pose a good selling opportunity for the short-term trader, but some stocks may go long and hard while being overbought. Regardless, the high RSI together with the trend position increases the risk and higher daily movements (volatility) should be expected. A correction down in the nearby future seems very likely and it is of great importance that the stock manages to break the trend before that occurs.
Our recommended stop-loss:$82.95(-2.94%) (This stock has medium daily movements and this gives medium risk. The RSI14 is 78 and this increases the risk substantially. There is a buy signal from a pivot bottom found 31 days ago.)
Since the stock is closer to the resistance from accumulated volume at $85.96(0.59%) than the support at $80.16(6.20%), our systems don't find the trading risk/reward intra-dayattractive and any bets should be held until the stock is closer to the support level.
Several short-term signals are positive and we conclude that the current level may hold a buying opportunity, as there is a fair chance for General Mills Inc stock to perform well in the short-term period.
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This chart is not advice or a guarantee of success. Rather, it gauges the real-time recommendations of three popular technical indicators: moving averages, oscillators and pivots. Finder is not responsible for how your stock performs.
Valuing General Mills stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of General Mills's overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
Recently General Mills has paid out, on average, around 50.23% of net profits as dividends. That has enabled analysts to estimate a "forward annual dividend yield" of 2.54% of the current stock value. This means that over a year, based on recent payouts (which are sadly no guarantee of future payouts), General Mills shareholders could enjoy a 2.54% return on their shares, in the form of dividend payments. In General Mills's case, that would currently equate to about $2.13 per share.
General Mills's payout ratio would broadly be considered high, and as such this stock could appeal to those looking to generate an income. Bear in mind however that companies should normally also look to re-invest a decent amount of net profits to ensure future growth.
Consumer stocks have been a rather interesting sector to watch in the market. There are many types of consumer stocks out there. There are food companies related to restaurants, packaged foods, supermarkets, and much more. With the current state of the world due to the pandemic, many top food stocks have been in trouble.
Analysts predicted quarterly earnings for Kellogg being at $0.93 a share. Kellogg beat that consensus by reporting earnings of $1.24 a share, 33% more than what was predicted. This has caused an uptick of K stock price. Before the earnings report K stock was around $68 a share, and it has now reached $69.44 a share on average. This is more than a 2% increase of K stock price in just one day because of the earnings reported.
Well, GIS stock is up 3.78% on August 3rd. This is due to a positive earnings report that General Mills released. Before the uptick GIS stock was at $62.38 a share. After the GIS stock price rose it reached $64.74 a share. GIS stock was at $53 a share before the pandemic started. So GIS stock price is up more than 22% since February.
If these food stocks continue to see positive results it is possible for their price to rise higher. The only problem is that the market is highly volatile due to the state of the world at the moment. There are still many food stocks on the rise for investors to consider. That is why K stock and GIS stock are potential food stocks to buy at the start of August 2020.
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