Business

The Motley Fool Take

General Mills Does Generally Well

While many people may know General Mills (NYSE: GIS) for its variety of delicious consumer goods products (Cheerios, Yoplait, Haagen-Dazs and Nature Valley, to name a few), many fail to think of it as a profitable stock. But after good news in its latest earnings report, more people may be paying attention to this oftenoverlooked company.

The company’s earnings rose an impressive 35 percent over year-ago levels, while revenue advanced 5.3 percent, largely due to higher volume. Sales at the company’s international segment grew 27 percent to $1.09 billion, which created an impressive 56 percent boom in that division’s operating profit.

General Mills is one of many in the food industry that are struggling with the global market. On one hand, consumers are still very budget-conscious and are focused on getting the most bang for their buck with cheap, bulk foodstuffs. But the drought in the Midwest and rising rawmaterial costs are slashing profit margins and forcing companies to cut back as much as possible. That’s one reason General Mills plans to cut about 2 percent of its workforce in the near future.

General Mills has better revenue growth and a larger operating margin than many of its competitors, not to mention a solid dividend yield recently near 3.2 percent. Combined with a decent P/E ratio, it looks like a solid long-term investment. ¦


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