General Mill (NYSE:GIS) Investment – Fruitful or Not?

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By Stefan Larson on November 11, 2014 Financial

General Mills (NYSE: GIS) is a consumer product business, which is not just a food giant, but has also been returning healthy dividends, with a 3.1% yield. But no matter how happy the investors are, one should keep a keen eye on the company’s future prospects, as it doesn’t take long for the company to fall apart due to the competition it faces. Let’s take a quick look into what General Mills (NYSE: GIS) offers to those who want to keep the healthy return consistent and are dependent on the income.

General Mills (NYSE: GIS) cut on growth according to guidance.

What makes a stock successful is its regular increase in its revenues and earnings, but General Mills (NYSE: GIS) have had trouble in this area lately. And as recently as Friday, the company left a comment for its investors, portraying how difficult and toxic the current environment is. This has led to the 2015 guidance, outlining slow growth and weak trends among the food industry. Even though the company had predictions of growth by mid-single digit percentage for the year due to currency fluctuations, but the overall revenue now is only expected of low single digit climb and operating profits are also expected to fall.

On the other hand, to save face, General Mills (NYSE: GIS) has worked hard on cost saving in order to improve its bottom line performance. But these are long term plans and won’t produce any immediate effect for investors to see. There is hope that 2016 would see savings rise from $260 million to $280 million.

Acquisition of Annie.

In the beginning of the year, General Mills (NYSE: GIS) spent $820 million in order to acquire Annie’s, the natural food specialist. This acquisition not only helped in boosting revenue and net income, but also gave General Mills (NYSE: GIS) a new initiative of entering key organic and natural foods segment. As trends have now changed towards healthier life styles and consumers have become more health conscious, this acquisition has gained General Mills (NYSE: GIS) popularity among consumers.

General Mills (NYSE: GIS) has established at a level that it not only is able to cater to the demand of natural foods, but also providing convenient food, like frozen products, ready to eat cereal and portable yogurt. General Mills (NYSE: GIS) is targeting consumers with its “eat on the go” strategy. Regardless of a decrease in many aspects of the business, General Mills (NYSE: GIS) is gaining competitive edge over innovation and premium prices. And with its latest acquisition, it can promise healthy meals in a quick and convenient manner. This in turn lets the company take an advantage to pay dividends for years ahead.

It does seem that a lot is happening for General Mills (NYSE: GIS), but it is still recommended that investors keep a closer eye on the company’s latest initiatives and decide on their investment tactics, if the company produces improvement in revenues and better earnings in the long run.