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General Mills (GIS) Gains But Lags Market: What You Should Know

Zacks Equity Research

General Mills (GIS) closed the most recent trading day at $54.31, moving +0.02% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.08%. At the same time, the Dow added 0.91%, and the tech-heavy Nasdaq gained 1.31%.

Coming into today, shares of the maker of Cheerios cereal, Yoplait yogurt and other packaged foods had gained 3.41% in the past month. In that same time, the Consumer Staples sector gained 0.85%, while the S&P 500 lost 0.68%.

GIS will be looking to display strength as it nears its next earnings release, which is expected to be September 18, 2019. The company is expected to report EPS of $0.77, up 8.45% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.09 billion, down 0.05% from the prior-year quarter.

GIS's full-year Zacks Consensus Estimates are calling for earnings of $3.37 per share and revenue of $17.42 billion. These results would represent year-over-year changes of +4.66% and +3.3%, respectively.

It is also important to note the recent changes to analyst estimates for GIS. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. GIS is holding a Zacks Rank of #2 (Buy) right now.

Digging into valuation, GIS currently has a Forward P/E ratio of 16.12. For comparison, its industry has an average Forward P/E of 18.29, which means GIS is trading at a discount to the group.

Investors should also note that GIS has a PEG ratio of 2.3 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Food - Miscellaneous industry currently had an average PEG ratio of 2.42 as of yesterday's close.

The Food - Miscellaneous industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 148, putting it in the bottom 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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