Should You Invest in General Mills?
General Mills Incorporation designs, manufactures, and sells food products around the world. They make cereals, yogurts, nutrition bars, pet food, and other snack products. They operate under the Cheerios, Cinnamon Toast Crunch, Yoplait, Haagen-Dazs, Fiber One, and many more. The company is based in the United States and was founded in 1866
Why You Should?
- General Mills actively looks to widen its product portfolio by buying other companies such as Yoplait (the second most popular yogurt brand in the world), Blue Buffalo Pet Food, and many others. This makes it a fast-growing food company in the world and will help it grow its revenues and profits in the years to come.
- The COVID-19 Pandemic has benefited the company’s sales. Consumers were stocking up on pantry products for both humans as well as their pets during this pandemic. Consumers have also been prioritizing the purchase of food products over other non-essential products during these tough economic times. This has benefited the company’s results.
- In my opinion, I think that General Mills is a great recession-proof investment because food and pet food products will be essential regardless of the economic times. This along with the popular brands that it sells across over 100 countries will further prevent adverse impacts during tough economic times.
- General Mills has seen rising revenues and profits over the past couple of financial years due to the factors already mentioned in this post. This will help it grow into other food markets and help it acquire more companies in the future. Having a constant flow of revenues and profits will also help it build a stronger balance sheet in the future. In the financial year of 2020, the company reported revenues of around 17.6 billion and profits of around 2.2 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues of around 16.9 billion and profits of around 1.75 billion.
Why You Should Not?
- General Mills has low margins across the bulk of its products due to competition from companies like Kellogg’s as well as J.M. Smuckers, both of whom offer competing products. Other store name brands like Costco’s Kirkland Signature also lower the margins of the company who operates in a price-sensitive industry. This might hurt the company in the future.
- General Mills does not have the strongest balance sheet as it has total liabilities of over 22 billion dollars. This might hurt the company’s ability to raise money to stay afloat and/or continue to acquire company’s at a rapid pace. Investors should be careful as the stock might underperform the market because of this. However, General Mills currently holds a slowly improving balance sheet.
- The COVID-19 Pandemic has hurt the company’s operating costs as they have to protect workers and reduce production in some factories. They also have seen their commercial sales of their products to hotels, restaurants, and other commercial users decrease as government regulation has shut down/limited these industry's operations. These factors have hurt the company’s results.
In my opinion, I think that General Mills is a great long-term investment due to the vast variety of products that it offers and sells in over 100 countries. In addition to this, rising revenues and profits will help the company build a stronger balance sheet. However, if you think that this company will be plagued with liability issues and low margins due to competition, I would stay away from this stock.