General Mills (GIS) Stock Is Stuck Trading Sideways
NEW YORK (TheStreet) --
General Mills (GIS) has been stuck in a $54 to $60 range since April. The 200-day moving average is still positive, but the 50-day average has been "whipsawed" with the sideways range. On the bear side of the ledger, the On-Balance-Volume (OBV) line peaked in October. GIS would break out on the upside with a close above $60, but a close below $55 is likely to tip the scales to the downside.
The technical signals from this chart, above, are mixed. The 40-week moving average is still bullish. The OBV line is neutral but the Moving Average Convergence Divergence (MACD) is pointed down and may be what shifts the overall picture to the bear. Traders should remain flexible and go with either an upside breakout if it occurs, or get defensive if we break below $55.
TheStreet Ratings team rates GENERAL MILLS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
We rate GENERAL MILLS INC (GIS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, solid stock price performance, growth in earnings per share and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $430.90 million or 30.81% when compared to the same quarter last year. In addition, GENERAL MILLS INC has also vastly surpassed the industry average cash flow growth rate of -20.72%.
- 41.19% is the gross profit margin for GENERAL MILLS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.13% trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- GENERAL MILLS INC has improved earnings per share by 25.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL MILLS INC reported lower earnings of $1.97 versus $2.83 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $1.97).
- GIS, with its decline in revenue, slightly underperformed the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: GIS
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.