Valued at a market cap of $36.6 billion, General Mills, Inc. (GIS) manufactures and markets branded consumer foods. The Minneapolis, Minnesota-based company’s principal product categories include ready-to-eat cereals, convenient meals, snacks, yogurt, super-premium ice creams, and baking mixes and ingredients.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” and General Mills fits the label perfectly. The packaged foods company boasts a portfolio of over 100 brands, including Cheerios, Pillsbury, and Betty Crocker, and serves customers in more than 100 countries. The company is renowned for its quality and innovation.
Despite its strengths, the food processing company’s shares have slipped nearly 12.9% from its 52-week high of $75.90 reached on Sep. 10. Moreover, over the past three months, GIS has declined 11.6%, significantly lagging behind the S&P 500 Index’s ($SPX) 9.8% gain.
Moreover, In the longer term, GIS has gained 1% over the past 52 weeks, significantly lagging behind SPX’s 31.1% returns. On a YTD basis, shares of GIS are up 1.5%, massively underperforming SPX’s 26.5% gains over the same time frame.
To confirm its bearish trend, GIS has been trading below its 200-day moving average since late October and has remained below its 50-day moving average since early November.
On Nov. 14, GIS announced that it would acquire Whitebridge Pet Brands’ a premium cat feeding and pet treating business, from European investment firm NXMH for $1.45 billion. On Sep. 18, shares of GIS closed up marginally after its Q1 earnings release. The company’s revenue declined 1% year-over-year to $4.8 billion, while its adjusted EPS of $1.07 fell 2% from the year-ago quarter. Its revenue decreased primarily due to unfavorable organic net price realization and mix.
However, better volume, net sales, and market share trends compared to last quarter and GIS’ announcement of the proposed sale of its North American Yogurt business to reshape its portfolio for stronger growth and profitability might have slightly bolstered investor confidence.
GIS has slightly underperformed its rival, The Campbell's Company’s (CPB) 1.5% gains over the past 52 weeks. Nonetheless, on a YTD basis, it has outperformed CPB’s marginal increase over the same time frame.
Despite GIS’ recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering it, and the mean price target of $73.67 suggests a modest 11.4% premium to its current levels.
