Tumbling to a price of $67.26 during today's evening trading session, shares of General Mills are now -5.53% below their average target price of $71.2. Does this mean the stock will reverse course? Analysts are giving GIS an average rating of hold and target prices ranging from 61.0 to 77.0 dollars per share.
It seems the market sentiment regarding General Mills is mostly optimistic, since it has a short interest of only 2.9%. This is the percentage of the share float that is being shorted by investors who are hoping the stock's price will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on General Mills is to look at the percentage of institutions that are invested in the stock. In this case, 79.3% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
To sum up, General Mills is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a hold rating, an average amount of shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about GIS:
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The stock has trailing 12 month earnings per share (EPS) of $4.36
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General Mills has a trailing 12 month Price to Earnings (P/E) ratio of 15.4 compared to the S&P 500 average of 27.65
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The company has a Price to Book (P/B) ratio of 4.02 in contrast to the S&P 500's average ratio of 4.59
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General Mills is a Consumer Staples company, and the sector average P/E and P/B ratios are 22.64 and 2.79 respectively
