After announcing an earnings beat, General Mills took the market by storm today, rocketing to $79.72 -- which is now above its mean target price of $73.18. Today's 5.7% movement implies there may not be much more room for upwards movement for the stock -- if its analysts are to be believed. They are giving the Packaged Foods stock on average rating of hold, with target prices ranging from 57 to 81 dollars per share.
The market sentiment on the stock is decidedly optimistic, since General Mills, has a short interest of only 2.2%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of General Mills,, institutional investors own 78.4% of the shares. This would indicate a positive sentiment towards the stock among institutions. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in GIS, it probably means they believe it is a solid investment choice. But it could also mean they are buying up shares in an effort to acquire the company or get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Reviewing the analyst coverage of a stock as well its short and institutional ownership percentages gives a glimpse of what the current market sentiment is on General Mills,. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about GIS:
It has a trailing 12 month price to earnings (Eps) of $4.42 per share
General Mills, has a trailing 12 month Price to Earnings (P/E) ratio of 18.0 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 4.5 in contrast to the S&P 500's average ratio of 2.95
General Mills, is a Consumer Defensive company, and the sector average P/E and P/B ratios are 24.21 and 4.09 respectively
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