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Should Investors Buy General Electric or General Mills Stock Right Now?
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Adding industry conglomerates to the portfolio is typically a sound decision and seeing if General Electric (GE - Free Report) or General Mills (GIS - Free Report) fit the bill is a worthy conversation.
General Electric’s diversified operations including aerospace and healthcare instantly make the company an option as a multi-sector conglomerate with General Mills being a global leader among consumer food manufacturers and expanding into pet products as well.
Let’s see if it’s time to buy stock in either of these iconic companies as investors look for buy-the-dip candidates amid recent market volatility.
Recent Performance & Valuation
General Electric’s stock is up +31% this year to top the S&P 500 and Nasdaq while General Mill’s stock has dropped -22% on fears of slower consumer food spending as the company continues to lose its pandemic mojo.
To that point, General Mill’s stock is now only up +9% over the last three years to also trail General Electric’s +122% with GE being boosted by the rebound in air travel strengthening its aerospace segment.
Image Source: Zacks Investment Research
However, General Mills makes a stronger case for value trading at $65 a share and 14.4X forward earnings. This is attractively beneath the S&P 500’s 20.9X and well below General Electric’s 49.1X with GE shares trading at $109.
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Growth & Outlook
In regard to their outlooks, the bottom-line expansion of General Electric and General Mills is attractive but both companies are seeing slower sales growth.
General Electric’s earnings are expected to dip -13% this year but rebound and soar 90% in fiscal 2024 at $4.31 per share. On the top line, sales are forecasted to drop -19% in FY23 but stabilize and rise 9% in FY24 to $67.31 billion. With that being said, FY24 sales projections would be a 15% decrease over the last five years with 2020 sales at $79.61 billion.
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Turning to General Mills, annual earnings are expected to be up 4% in its current FY24 and rise another 5% in FY25 at $4.72 per share. Total sales are projected to rise 3% in FY24 and edge up another 1% in FY25 to $21.01 billion. Despite the slowing top-line growth, FY25 projections would be a 16% increase over the last five years with sales at $18.12 billion in General Mills' fiscal 2021.
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Dividends
General Mills' dividend currently has the advantage over General Electric. GIS’s annualized dividend growth over the last five years is 2% for a current yield of 3.64% compared to GE’s modest 0.29%. General Electric’s dividend has declined -13% over the last five years on efforts to reserve capital following the pandemic.
Image Source: Zacks Investment Research
Takeaway
At the moment General Electric and General Mills stock both land a Zacks Rank #3 (Hold). General Electric’s strong price performance in correlation with its FY24 earnings outlook is very intriguing while General Mills' valuation and dividend are rewarding for longer-term investors. This makes holding stock in both conglomerates attractive although there could still be better buying opportunities ahead.
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Should Investors Buy General Electric or General Mills Stock Right Now?
Adding industry conglomerates to the portfolio is typically a sound decision and seeing if General Electric (GE - Free Report) or General Mills (GIS - Free Report) fit the bill is a worthy conversation.
General Electric’s diversified operations including aerospace and healthcare instantly make the company an option as a multi-sector conglomerate with General Mills being a global leader among consumer food manufacturers and expanding into pet products as well.
Let’s see if it’s time to buy stock in either of these iconic companies as investors look for buy-the-dip candidates amid recent market volatility.
Recent Performance & Valuation
General Electric’s stock is up +31% this year to top the S&P 500 and Nasdaq while General Mill’s stock has dropped -22% on fears of slower consumer food spending as the company continues to lose its pandemic mojo.
To that point, General Mill’s stock is now only up +9% over the last three years to also trail General Electric’s +122% with GE being boosted by the rebound in air travel strengthening its aerospace segment.
Image Source: Zacks Investment Research
However, General Mills makes a stronger case for value trading at $65 a share and 14.4X forward earnings. This is attractively beneath the S&P 500’s 20.9X and well below General Electric’s 49.1X with GE shares trading at $109.
Image Source: Zacks Investment Research
Growth & Outlook
In regard to their outlooks, the bottom-line expansion of General Electric and General Mills is attractive but both companies are seeing slower sales growth.
General Electric’s earnings are expected to dip -13% this year but rebound and soar 90% in fiscal 2024 at $4.31 per share. On the top line, sales are forecasted to drop -19% in FY23 but stabilize and rise 9% in FY24 to $67.31 billion. With that being said, FY24 sales projections would be a 15% decrease over the last five years with 2020 sales at $79.61 billion.
Image Source: Zacks Investment Research
Turning to General Mills, annual earnings are expected to be up 4% in its current FY24 and rise another 5% in FY25 at $4.72 per share. Total sales are projected to rise 3% in FY24 and edge up another 1% in FY25 to $21.01 billion. Despite the slowing top-line growth, FY25 projections would be a 16% increase over the last five years with sales at $18.12 billion in General Mills' fiscal 2021.
Image Source: Zacks Investment Research
Dividends
General Mills' dividend currently has the advantage over General Electric. GIS’s annualized dividend growth over the last five years is 2% for a current yield of 3.64% compared to GE’s modest 0.29%. General Electric’s dividend has declined -13% over the last five years on efforts to reserve capital following the pandemic.
Image Source: Zacks Investment Research
Takeaway
At the moment General Electric and General Mills stock both land a Zacks Rank #3 (Hold). General Electric’s strong price performance in correlation with its FY24 earnings outlook is very intriguing while General Mills' valuation and dividend are rewarding for longer-term investors. This makes holding stock in both conglomerates attractive although there could still be better buying opportunities ahead.