Deutsche Bank Raises General Mills’ Target Price to $63 per Share



General Mills’ price movement 

General Mills (GIS) has a market cap of $39.7 billion. Its stock rose by 0.56% to close at $66.77 per share on June 23, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 1.5%, 7.0%, and 17.6%, respectively, on the same day. GIS is trading 3.6% above its 20-day moving average, 5.7% above its 50-day moving average, and 13.6% above its 200-day moving average.

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Related ETF and peers

The PowerShares High Yield Equity Dividend Achievers Portfolio (PEY) invests 1.6% of its holdings in General Mills. The ETF aims to track a yield-weighted index of US companies that have increased their annual dividend for at least ten consecutive years. The YTD price movement of PEY was 18.8% on June 23.

The market caps of General Mills’ competitors are as follows:

  • Kellogg (K): $27.3 billion
  • Hershey (HSY): $20.7 billion
  • Post Holdings (POST): $5.1 billion

General Mills’ new appointment

Jeffrey L. Harmening has been appointed as General Mills’ president and chief operating officer, effective July 1, 2016. Harmening will oversee all company operations, including the US Retail, International, and Convenience Stores and Foodservice segments, as well as sales and channel development, global supply chain and innovation, technology, and quality functions.

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General Mills sees a rise in its target price

Deutsche Bank has raised General Mills’ target price to $63 from $62 per share. It rates the stock a “hold.”

TheStreet Ratings team rates General Mills a “buy” with a score of “A.”

General Mills’ performance in fiscal 3Q16

General Mills (GIS) reported fiscal 3Q16 net sales of ~$4.0 billion, a fall of 8.0% from the net sales of $4.4 billion in fiscal 3Q15. Sales from the US Retail, International, and Convenience Stores and Foodservice segments fell by 6.6%, 13.1%, and 2.4%, respectively, compared to fiscal 3Q15.

In fiscal 3Q16, the company’s cost of sales as a percentage of net sales fell by 3.4%, and its operating profit rose by 9.1%, compared to fiscal 3Q15. It reported a gain on divestitures of $1.5 million in fiscal 3Q16. Its net income and EPS (earnings per share) rose to $361.7 million and $0.59, compared with $343.2 million and $0.56, respectively, in fiscal 3Q15.

In fiscal 3Q16, General Mills’ cash and cash equivalents and inventories fell by 0.19% and 14.8%, respectively, compared to fiscal 3Q15. Its current ratio and debt-to-equity ratio rose to 0.76x and 3.0x from 0.67x and 2.9x, respectively, in fiscal 3Q15.

In the final part of this series, we’ll discuss Visteon Corporation.


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