Division General Mills (WKN: 853 862) formed an inheritance. Over the past month, stock certificates have improved from over € 70 to around € 64. In the meantime, even on a transitional minimum of 62 euros. It is not insignificant in such a short time.
But does that make General Mills stocks buy now? Again, however, it is crucial to distinguish between stock performance and operating performance. An interesting opportunity for a complementary purchase may soon come up. Or not, depending on what you see.
General Mills: The hole in sight!
Basically, let’s not forget that General Mills stock is still growing 10.8% from the start of the year. Meanwhile, the plus was higher, but this year it is and will be just defensive dividend shares with solid price strength. The American food company is definitely one of them.
In any case, fundamental valuation is in the middle between cheap and expensive, which makes the starting position more difficult. For example, the dividend yield is only 2.95%, which is lower than in recent years. However, with a price / profit ratio of around 18.6, the valuation measure is rather moderate. At least compared to other food companies that have historically grown and have solid price power in times of inflation.
Due to this price power, moderate growth is possible, and especially profit growth. There are also new growth opportunities for General Mills in the pet food market and convenience stores. These are the two areas of growth that can deliver double-digit revenue growth that is also above inflation. In addition, the management board is changing the portfolio and focusing on new areas of growth.
General Mills also has paid dividends for over 100 years. For approximately three and a half decades, management maintained at least a steady dividend payout per share. Finally, I am coming to mixed conclusions right now.
The last line
General Mills stock is certainly not unattractive. I see a timeless investment that can develop differently in the short to medium term. If inflation stays on an average single-digit level for the next two or three years, moderate growth is possible. This could allow the stock to rise to a valuation level and generate solid returns.
At the same time, the valuation is not record cheap, especially with the dividend yield below 3%. It may make sense to put your first foot in the door. However, in order to invest on a larger scale, I would wait for more favorable conditions.
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Vincent owns shares in General Mills. Motley Fool does not own any of the listed shares.