This morning, Hedgeye CEO Keith McCullough wrote in Real-Time Alerts:
"While I like GIS from a Style Factor perspective (it did its job last week, closing up in a down tape - doing its job again this a.m. +1%), it's:
A) Signaling a series of lower-highs from a long-term perspective
B) Not as well loved by my analyst team (Penney and Laidlaw)
So I'll take it off here on the overbought signal. We can always come back to it, lower.
KM"
Hedgeye Consumer Staples analysts Howard Penney and Shayne Laidlaw sum it up below:
"We added General Mills (GIS) to Investing Ideas on May 26, 2015. During that time, the stock price has risen +10% versus the S&P 500, which is down -2.6%. While we still like the long-term story, the stock’s performance in 2016 has been nothing short of spectacular. Year-to-date GIS is up +7.8% versus +1.3% for the S&P 500. The company’s 3Q15 performance was mixed with the company missing on revenues and beating on EPS with the benefit of cost cutting.
That being said, there are a number of one-time items impacting volume growth that should self-correct in 4Q16 and FY17. GIS is currently trading at 13.9x EV / NTM EBITDA an all-time high for the company.
Looking past GIS, the entire Consumer Staples space feel like there is a Safety Trade/ZBB/M&A bid underneath the entire group. We maintain our long-term bullish stance on GIS, but given the rapid acceleration to all-time highs in the YTD period, a correction is inevitable."
