General Mills, Inc. (GIS): A Buy For The Long Haul

Competition

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General Mills’ main industry peers are Nestle and Unilever plc (ADR) (NYSE:UL). General Mills is clearly trading at a discount over its industry peers. On the negative side, General Mills currently has a high debt-to-equity ratio relative to its main competitors. However, as I discussed above, the company has substantial cash flows that give it the ability to decrease its debt levels.

Nestle has very low debt to equity ratio. Recently, it announced Q1 results with consolidated sales of $21.9 billion. Though its revenue growth remains quite stagnant, it has solid margins on sales. The company is outperforming European markets. Additionally, it is gaining stronger momentum in emerging markets.

On the other hand, Unilever plc (ADR) (NYSE:UL) has been displaying a solid financial situation. In the past three years, on average, its revenue growth stands at 8.8% when industry average is at -11.2%. Additionally, it has solid margins on sales. In the ttm, its net margin stands at 8.7% when industry average is at 5%. With a solid financial position, Nestle looks like a strong pick for dividend investors.

Conclusion

General Mills clearly looks like a strong buy for the long haul. The company has a smart investment strategy and strong business model. All of its three business segments are growing at an exceptional pace. Additionally, the company’s ability to consistently improve margins makes it the best company among its peers. The company continues to pay consistently increasing dividends, combined with steady price appreciation. I believe with its strong business model and portfolio of market-leading brands, General Mills, Inc. (NYSE:GIS) should continue generating solid cash flows over the long term.

The article General Mills: A Buy For The Long Haul originally appeared on Fool.com and is written by siraj sarwar.

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