General Mills, Inc. (GIS) dominated headlines recently after the consumer giant released its second-quarter earnings report. Given recent market volatility, is now a good time to buy into GIS?
General Mills’ Company Profile
With roots that go back to 1928, General Mills is one of the largest providers of branded consumer foods in the world. General Mills is best known for its ready-to-eat breakfast cereals, which include such household staples as Cheerios, Wheaties, Total and Lucky Charms.
Additionally, General Mills has branched out into dairy products like Yoplait yogurt and Haagen-Dazs ice cream, baking products like Gold Medal flour and Bisquick, as well as convenient meal kits like Old El Paso and Betty Crocker.
GIS brought in $17.9 billion in net sales last year and currently employs 43,000 full-time employees. Value investors may be interested to know that GIS stock yields 3.0%, and the next ex-dividend date is on Jan. 8.
GIS Stock Earnings Rundown
During the second quarter, General Mills had to contend with unfavorable consumer trends in the U.S. and waning demand in key emerging markets. GIS reported a 37% decline in Q2 profit compared to the previous year. Net earnings for the quarter dipped to $3.46 million, or 56 cents per share.
Over the same period, net sales dropped 3.4% to $4.71 billion, missing analysts’ estimates of $4.79 billion. Nonetheless, adjusted earnings were 80 cents per share, beating analysts’ estimates of 77 cents per share.
General Mills is facing a number of headwinds that are weighing on earnings, and it doesn’t look like these will abate any time soon. Looking ahead to fiscal 2015, analysts expect General Mills to earn $2.84 per share for the year on $18.04 billion in revenue; compared with FY 2014 this translates to just 0.7% sales and earnings growth.
General Mills’ Current Ratings
GIS stock spent much of this year fluctuating between “sell” and “hold” territory, which can be partially attributed to General Mills’ lackluster buying pressure. GIS stock earns a C for its Quantitative Grade.
General Mills’ fundamental metrics are also lacking. Out of eight metrics the company excels in only one, return on equity, which earns an A grade. GIS earns C grades in operating margin growth, earnings momentum and cash flow. Meanwhile, GIS flat out fails in earnings surprises (F) and earns D grades in sales growth, earnings growth, and analyst earning revisions. Overall, GIS receives a C-rating for its Fundamental Grade.
As of this posting, I consider GIS a C-rated ‘”hold.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
