1Mon·

Analysts become more cautious with General Mills

With $GIS (-3.22%) the mood among analysts is becoming increasingly cautious. Several firms have recently lowered their estimates. Particularly clear was $WFC (-4.69%) downgraded the share to Underweight and reduced the target price from $45 to $35. Other banks have also become more cautious:

$BOA : Neutral, price target $48 (previously $55)
$GS (+0.56%) : Target price around $47
$MS (+0.94%) : Underweight, target price around 44 $

The main reason for the downgrades is an expected decline in profits of around 16-20% in the current financial year. Weaker volumes, more cautious consumers and pressure on margins are having a negative impact. The pet food segment, which has been strong for a long time, is also showing the first signs of weak growth.

The recent development of $GIS (-3.22%) is also reflected in the share price performance. The share has been on a clear downward trend since last year and has repeatedly hit new lows.

What is your $GIS (-3.22%) currently? Is the pessimism $GIS (-3.22%) now exaggerated, or could the decline in earnings continue to weigh on the share?

https://de.investing.com/news/analyst-ratings/gewinnrisiken-wells-fargo-stuft-aktie-von-general-mills-herab-93CH-3384961

~ No investment advice ~

13 Comments

Hu_F_10@Hu_F_10

1Mon

Hi, I'm looking forward to the comments from other users. My position is down 21%. I have now added another small savings plan. In principle, I am convinced by the products of $GIS and the dividend is also respectable.

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DividendenPapa@DividendenPapa

1Mon

@Hu_F_10 $GIS is currently even my worst position in the portfolio with more than -30%. As things stand, I still have the share in a small savings plan. However, I am still a little unsure how I should handle the share in the future. There are currently much better investment opportunities in the consumer staples sector. I am also looking forward to further comments.

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Hu_F_10@Hu_F_10

1Mon

@DividendenPapa am in the same situation 😅

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DerJude@DerJude

1Mon

@DividendenPapa I bought them because of the cash flow.

If you don't know what you want to do with the share, you should take it out of your portfolio and stop the savings plan.

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Aktien_Domi@Aktien_Domi

1Mon

@DividendenPapa now over 5% dividend. I am down 10% after my additional purchase this morning. Same situation in my portfolio at #diaego. But I'm holding these too. They will also come back. I don't know when, but those who can wait have a clear advantage.

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DividendenPapa@DividendenPapa

1Mon

@Aktien_Domi My main concern at the moment is the falling profit. To be honest, I don't see any fundamental structural problems at General Mills. Rather, changes in consumer behavior and short-term cost factors seem to be putting pressure on margins. I think the situation is similar at $DGE, isn't it? I only have the share on the WL and am not quite up to date.

I bought $GIS primarily for passive income and as a defensive anchor in the portfolio. The exciting question for me remains: Is the decline in volume and sales only temporary, or is it a longer-term trend in consumer behavior?

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DividendenPapa@DividendenPapa

1Mon

@DerJude I also bought the $GIS share primarily because of the passive cash flow, but also as a stable, defensive anchor in my portfolio. I personally don't think that selling directly just because of the current uncertainty is the right approach.

What I find more exciting is the fundamental question of whether the current declines in profits and sales are only temporary or whether there is a longer-term risk due to changes in consumer behavior? For me, that would be the more decisive point for the investment thesis. What is your assessment of the current situation?

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Aktien_Domi@Aktien_Domi

1Mon

@DividendenPapa my personal opinion is that the earnings prospects of a consumer staples stock cannot be compared with tech stocks. $GIS is now cheaper than it has been for over 10 years. Inflation has risen significantly since then. So apart from growth, I don't see much downside risk. What do you think?

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DividendenPapa@DividendenPapa

1Mon

@Aktien_Domi As already mentioned, the biggest risk for me is the current sales and profit trend. I have not been able to identify any other structural problems.

I agree with you that you can't expect General Mills to grow like a tech company.

And yes, at first glance, $GIS currently looks cheaper than it has for years. But in my opinion, this is precisely why you should ask yourself why. To avoid catching a potential value trap, I think it is important to check whether the current declines in profits and sales are only temporary or whether a longer-term trend is actually emerging here. I also find it interesting to look at the share price performance of $GIS in comparison to the peer group (performance of Yahoo Finance):

$GIS 1 year: -33% 5 years: -34%
$PG 1 year: -10% 5 years: 17%
$ULVR 1 year: 0% 5 years: 14%
$NESN 1 year: -9% 5 years: -19%
$MDLZ 1 year: -15% 5 years: -4%

Here, too, you can see that $GIS was penalized significantly more than the peer group.

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Aktien_Domi@Aktien_Domi

1Mon

https://www.kapitalmarktexperten.de/general-mills-aktie-zahlen-im-fokus/

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DividendenMax@DividendenMax

1Mon

I would cautiously say that the profit lies in purchasing.
They will adapt to consumer behavior.
With Nature Valley, for example, they are responding to the "healthy" trend!
I'm holding at the moment, but at some point I'll have to add if the P/E ratio is too low.

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aPinar@apinar_ARM

3Wk

I'm currently down 11%, by far my worst position. I have a small savings plan set up, which in this context will help me average down… I'll hold the position while I watch the dividends drop into my cash balance

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