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Category: Stock Market and General Mills Inc
Date: 19 December 2019 Stock Price: $53.18 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of General Mills, the owner of brands such as Cheerios, Nature Valley and Pillsbury
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About General Mills
General Mills, Inc., is an American multinational manufacturer and marketer of branded consumer foods sold through retail stores. It is headquartered in Golden Valley, Minnesota, a suburb of Minneapolis. So of General Mills products include Cheerios cereal, Yoplait yogurt, Nature Valley, Pillsbury refrigerated dough and Betty Crocker baking products.
Overview of General Mills' 2nd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise
- Sales: $4.420 billion (up from $4.411 billion from the same quarter of the previous year)
- Revenue increased by 0.2% over the last 12 months
- Cost of sales: $2.851 billion (down from $2.901 billion for the same quarter of the previous year)
- Cost of sales decreased by -2% over the last 12 months
- Net earnings: $580.8 million (up from $343.3 million for the same quarter of the previous year)
- Diluted income per share: $0.95 (up from $0.57 for the same quarter of the previous year)
- PE ratio of Generalills: 13.9
- Dividend declared for the quarter: $0.49
- Dividend yield of General Mills: 3.7%
- Diluted weighted-average shares outstanding:612 million (up from 606 million for the same quarter of the previous year)
- Cash and cash equivalents: $560.2 million
- Cash and cash equivalents per share: $0.91
- Cash and cash equivalents makes up 1.7% of General Mills' market capital
- Cash and cash equivalents makes up 1.84% of General Mills' total assets
- Accounts receivable: $1.772 billion
- Accounts receivable makes up 5.8% of General Mills' total assets
- Inventories: $1.719 billion
- Inventories makes up 5.8% of General Mills' total assets
- Stockholders equity of General Mills : $8.020 billion
- Stockholders equity per share: $13.10
- General Mills is trading at 4.05 times its stockholders equity which is just outside the expected range of between 2 and 4 which most companies tend to trade at.
General Mills' management commentary on their 2nd quarter 2020 earnings report
MINNEAPOLIS--(BUSINESS WIRE)-- General Mills (NYSE: GIS) today reported results for the second quarter ended November 24, 2019.
“I’m encouraged by our second-quarter performance, including the broad-based improvement in our organic sales trends and positive results on the bottom line,” said General Mills Chairman and Chief Executive Officer Jeff Harmening. “We will build on our topline momentum in the second half, fueled by increased investment in our brands. Based on our first-half results, and with confidence in our back-half plans, we are reaffirming our full-year fiscal 2020 guidance for sales, profit, and EPS and raising our guidance for free cash flow conversion.”
“I’m encouraged by our second-quarter performance, including the broad-based improvement in our organic sales trends and positive results on the bottom line,” said General Mills Chairman and Chief Executive Officer Jeff Harmening. “We will build on our topline momentum in the second half, fueled by increased investment in our brands. Based on our first-half results, and with confidence in our back-half plans, we are reaffirming our full-year fiscal 2020 guidance for sales, profit, and EPS and raising our guidance for free cash flow conversion.”
General Mills is pursuing its Consumer First strategy and executing against its global growth framework: 1) competing effectively through strong innovation, effective consumer marketing, and excellent in-store execution; 2) accelerating growth on its four differential growth platforms including Häagen-Dazs ice cream, snack bars, Old El Paso Mexican food, and its portfolio of natural and organic food brands; and 3) reshaping its portfolio through growth-enhancing acquisitions and divestitures, including the acquisition of Blue Buffalo, the leading brand in the fast-growing wholesome natural pet food category in the U.S. The company expects consistent topline growth generated by this growth framework, combined with margin expansion, disciplined cash conversion, and cash returns, will generate top-tier returns for General Mills shareholders over the long term.
Cash Flow Generation and Cash Returns
Cash provided by operating activities totaled $1.46 billion through six months of fiscal 2020, up 4 percent from the prior year, primarily driven by higher net earnings, partially offset by changes in non-cash restructuring, impairment, and other exit costs and inventory. Capital investments totaled $158 million. The company reduced debt by $655 million and paid $596 million of dividends in the first half of the year. Average diluted shares outstanding through six months increased 1 percent to 612 million.
Fiscal 2020 Outlook
General Mills reaffirmed its full-year fiscal 2020 targets for sales, profit, and EPS, and raised its target for free cash flow conversion:
Cash Flow Generation and Cash Returns
Cash provided by operating activities totaled $1.46 billion through six months of fiscal 2020, up 4 percent from the prior year, primarily driven by higher net earnings, partially offset by changes in non-cash restructuring, impairment, and other exit costs and inventory. Capital investments totaled $158 million. The company reduced debt by $655 million and paid $596 million of dividends in the first half of the year. Average diluted shares outstanding through six months increased 1 percent to 612 million.
Fiscal 2020 Outlook
General Mills reaffirmed its full-year fiscal 2020 targets for sales, profit, and EPS, and raised its target for free cash flow conversion:
- Organic net sales are expected to increase 1 to 2 percent. The combination of currency translation, the impact of divestitures executed in fiscal 2019, and contributions from the 53rd week in fiscal 2020 are expected to increase reported net sales by approximately 1 percentage point.
- Constant-currency adjusted operating profit is expected to increase 2 to 4 percent from the base of $2.86 billion reported in fiscal 2019. The benefit of the extra fiscal week is being reinvested in capabilities and brand-building initiatives to drive improvement in the company’s organic sales growth rate in 2020 and beyond.
- Constant-currency adjusted diluted EPS are expected to increase 3 to 5 percent from the base of $3.22 earned in fiscal 2019.
- The company now expects free cash flow conversion of at least 105 percent of adjusted after-tax earnings.
- Currency translation is expected to have an immaterial impact on fiscal 2020 adjusted operating profit and adjusted diluted EPS.
General Mills Inc (NYSE: GIS) stock price history
The image below shows the stock price history of Worthington (NYSE: WOR) over the last 5 years. And it's been a very average time for General Mills stockholders. 5 years ago General Mills was trading around $53.80 a stock, and its currently it's trading at $53.18. That's a slight loss of -1.15% suffered by General Mills stockholders over the last 5 years.
The stock of General Mills is trading at a lot closer to its 52 week high of $56.40 than it is to it 52 week low of $36.55, which to us is a clear indication that the short term sentiment and momentum of General Mills' stock is positive.
The stock of General Mills is trading at a lot closer to its 52 week high of $56.40 than it is to it 52 week low of $36.55, which to us is a clear indication that the short term sentiment and momentum of General Mills' stock is positive.
Recent coverage of General Mills (NYSE:GIS)
The extract below shows recent coverage of Worthington as obtained from TheStreet.com
General Mills (GIS) - Get Report before the open on Dec. 18 reported its seventh consecutive earnings beat. Sales rose on demand for food for family pets. If the stock does not sustain its post-earnings price gains, it faces a death cross on its daily chart. On its weekly chart the stock is below its 200-week simple moving average, or reversion to the mean, at $54.31.
My call is to sell strength to its monthly and semiannual risky levels at $53.35 and $53.99. A reason for concern about the Minneapolis company is flat sales at convenience stores and a year-over-year decline of 5% in Europe, Australia, Asia and Latin America. The stock closed Tuesday at $52.17, up 34% year to date and in bull-market territory 43% above its Dec. 17, 2018, low of $36.42.
Read the original article here
General Mills (GIS) - Get Report before the open on Dec. 18 reported its seventh consecutive earnings beat. Sales rose on demand for food for family pets. If the stock does not sustain its post-earnings price gains, it faces a death cross on its daily chart. On its weekly chart the stock is below its 200-week simple moving average, or reversion to the mean, at $54.31.
My call is to sell strength to its monthly and semiannual risky levels at $53.35 and $53.99. A reason for concern about the Minneapolis company is flat sales at convenience stores and a year-over-year decline of 5% in Europe, Australia, Asia and Latin America. The stock closed Tuesday at $52.17, up 34% year to date and in bull-market territory 43% above its Dec. 17, 2018, low of $36.42.
Read the original article here
General Mills (NYSE: GIS) latest stock valuation
So based on the 2nd quarter 2020 earnings report and fiscal guidance provided by General Mills' what do we value their stock at? Based on their latest earnings report and fiscal guidance provided our valuation model provides a target price (full value price) for General Mills' at $57.60 a stock. We therefore believe the stock of General Mills' is slightly undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $57.60 Therefore we believe the a good entry point into the stock of General Mills' is at $51.90 or below. We believe the stock of General Mills will trend upwards slightly in coming weeks to levels closer to our target price (full value price).
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $57.60 Therefore we believe the a good entry point into the stock of General Mills' is at $51.90 or below. We believe the stock of General Mills will trend upwards slightly in coming weeks to levels closer to our target price (full value price).
Next earnings release of General Mills
It is expected that General Mills will release their 3rd quarter 2020 earnings report in early March 2020