Inflation surged 8.2% year-over-year in September, and the ‘food at home‘ index climbed 13%. Moreover, according to the U.S. Department of Agriculture, food prices are expected to increase between 9% and 10% in 2022 and 2.5% to 3.5% in 2023.
On the other hand, the demand remains steady due to its non-cyclical nature. In addition, the demand for organic food is soaring amid rising health awareness. According to Statista, organic food sales in the United States amounted to $57.50 billion in 2021.
Furthermore, according to Future Market Insights, the packaged food market is expected to grow at a 5.3% CAGR from 2022 to 2032.
General Mills, Inc. (GIS)
GIS is involved in the manufacturing and marketing of consumer foods globally. The company operates through four segments: North America Retail; International; Pet; and Convenience Store & Foodservice.
On September 21, 2022, Jeff Harmening, GIS’ Chairman and CEO, said, “Given the strength of our first-quarter results and confidence in our ability to adapt to continued volatility ahead, we are increasing our full-year outlook for net sales, operating profit, and EPS growth.”
GIS’ net sales came in at $4.72 billion for the first quarter that ended August 28, 2022, up 3.9% year-over-year. Moreover, its net income came in at $820 million, up 30.8% year-over-year. Also, its EPS came in at $1.35, up 32.4% year-over-year.
GIS’ forward P/E of 18.24x is 5% lower than the industry average of 19.21x. Its trailing-12-month of Price/Cash Flow of 13.64x is 4.1% lower than the industry average of 14.23x.
GIS’ revenue is expected to increase 2.8% year-over-year to $19.53 billion in 2023. Its EPS is expected to grow 4.1% year-over-year to $4.1 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 22.3% to close the last trading session at $76.67.
GIS’ strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GIS has a B grade for Quality. In the B-rated Food Makers industry, it is ranked #27 out of 86 stocks. Click here for the additional POWR Ratings for Value, Sentiment, Growth, Momentum, and Stability for GIS.
Kellogg Company (K)
K has manufactured snacks and convenience foods in 21 countries and marketed its products in 180 countries. The Company’s segments include North America; Europe; Latin America; and AMEA (Asia, Middle East Africa).
K’s net sales came in at $3.86 billion for the second quarter that ended July 2, 2022, up 8.7% year-over-year. The company’s total assets came in at $18.94 billion for the period ended July 2, 2022, compared to $18.19 billion for the period ended January 1, 2022.
K’s forward P/E of 18.16x is 5.5% lower than the industry average of 19.21x. Its trailing-12-month Price/Cash Flow of 13.42x is 5.7% lower than the industry average of 14.23x.
K’s revenue is expected to increase 5% year-over-year to $14.89 billion in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 15.7% to close the last trading session at $71.76.
K’s overall B rating equates to a Buy in our POWR Ratings system. It has a B for Stability and Quality. K is ranked #21 in the same industry.
Beyond what is stated above, we’ve also rated K for Value, Growth, and Momentum. To see more of K’s POWR Ratings, click here.
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GIS shares were trading at $76.96 per share on Friday afternoon, up $0.29 (+0.38%). Year-to-date, GIS has gained 17.57%, versus a -20.58% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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