General Mills: Stay Long, Debt Is Decreasing And Business Is Stabilizing

Much Aligned General Mills Inc (GIS) was a stock that suffered due to a declining top line, declining sales for cereal, yogurt and snacks, market perception of overpaying for Blue Buffalo, a large jump in total debt, freezing the dividend, and negative market sentiment for consumer staples stocks. Overall, this was close to a perfect storm for General Mills. The stock price was over $72 per share in mid-2016 and dropped to sub-$37 by late 2018, an almost 50% decline. But with that said, the company has slowly been reducing total debt and improving operational performance. Blue Buffalo looks like it will be a positive for the company over time. In addition, General Mills has stabilized its yogurt business. Market sentiment has improved for consumer staples stocks leading to a recovering stock price. Furthermore, although the dividend was frozen it was not cut like that of Kraft Heinz Company (KHC). The company continues to be profitable and has margins better than most of its competitors. I expect the dividend to return to growth in late FY 2020 or early FY 2021. I view the stock as a long-term buy.

Please read the complete article at my profile on Seeking Alpha.

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