General Mills, Aon: Trending Tickers
General Mills (GIS) stock closed Wednesday lower after cutting its full-year sales forecast over consumer pullback. Aon plc (AON) shares fell after the British consulting firm announced plans to acquire NFP for $13.4 billion.
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Video Transcript
JOSH LIPTON: Let's get a check on some trending tickers here as well. Not just Paramount, but shares of General Mills, they're falling in today's trading action after the packaged goods giant cut its full-year guidance, citing softening demand from consumers in its most recent quarter. So that was part of the story here. The stock has been under pressure, down about 20%. It has not been easy if you're long this name. The outlook was not great, cut its organic sales growth.
Key here, the commentary about the consumer from the CEO saying, we're seeing consumers showing stronger than anticipated value-seeking behavior. And that is delaying volume recovery. They also talked about competition playing a role. So they're now looking for organic net sales growth in a range of flat to down 1%, was in a range of 3% to 4% growth.
DIANE KING HALL: And it looks like, basically, what they're saying is now consumers appear to be responding to that food-flation issue right. And we know that inflation had been a key component and increasing prices have been a key component in the strategy of some of these consumer-facing companies, right? But General Mills really noticing how the consumer is reacting now and the consumer making a trade down.
Maybe they aren't buying the Dunkaroos anymore. Maybe they're buying whatever is the store version was the great value version of that, or Bisquick. So, look, TD Cohen put out a note on that saying, you know, noting that their organic sales missed their estimates by a big degree. Pet food was that big miss there when you think about General Mills. And they talked about just what the risks are here.
Mature packaged food companies having that difficulty kind of keeping pace with where the consumer is going and what consumer preferences are. And, of course, obviously, the elasticity question, how much elasticity does that consumer have when you think about what they want to buy.
All right. Another ticker we're watching, shares of Aon, that's the management and consulting firm, they are-- they dropped today falling 6% after agreeing to buy insurer's NFP for around $13.4 billion. It's a cash and stock deal. It's part of a push by the company to take up more space in the insurance brokerage and wealth management deals.
So we know that often happens with where the buying party in a deal gets dinged. The question is also, obviously, how they're raising the funds for this part of that is through debt? So that is one of the issues of concern. And is this too rich a price that Aon is paying for NFP?
JOSH LIPTON: Yeah. And that's exactly what some analysts were saying. The price is higher, they note, than recent deals. They note in their opinion, this is more of a reaction, in their words, to losing ground versus a compelling deal. And you do see the stock slipping today basically now flat for the year.
DIANE KING HALL: Yeah. And I mean, Aon wanted to do a deal before. They couldn't do the one they wanted to do before with Willis Towers Watson. Now they're kind of coming back at the deal space. They've got NFP. We'll see how the investor community continues to react to them adding this to their balance sheet. The deal is expected to close middle of next year. It's going to include, it says, about $400 million in one-time transactions. Integration costs is expected to dilute adjusted earnings in 2025. They're finally expected to break even on that deal by 2026. So we'll be watching that one.
