GIS 63.03 (-0.22%)
US3703341046Consumer Packaged GoodsPackaged Foods

Last update on 2024-06-05

General Mills (GIS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Piotroski F-Score Analysis of General Mills (GIS) for 2023 shows a moderate rating of 6/9, reflecting financial strength and areas for improvement.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 6

We're running General Mills (GIS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

General Mills (GIS) scores a 6 out of 9 based on the Piotroski F-Score. This score evaluates the company's financial strength through profitability, liquidity, and operating efficiency criteria. GIS has positive net income and operating cash flow higher than net income, indicative of solid profitability. However, ROA has declined, suggesting potential inefficiencies. Liquidity is mixed, with a rising current ratio but increasing leverage. Notably, there has been a reduction in outstanding shares, signaling effective capital management. Operating performance shows an improving asset turnover but declining gross margin.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, General Mills demonstrates moderate financial health. The company shows strength in profitability and operating cash flow. However, investors should be cautious due to declining ROA and increasing leverage. Given that the general trend is positive in terms of asset utilization and liquidity improving, it might be worthwhile for an investor to keep an eye on this stock but proceed with cautious optimism. Further investigation into operational strategies and cost management would provide additional insights into its investment potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of General Mills (GIS)

Company has a positive net income?

Net income is a crucial measure of a company's profitability and financial health. Positive net income indicates that the company is profitable, which is a critical determinant for investors.

Historical Net Income of General Mills (GIS)

General Mills (GIS) has reported a net income of $2,593,900,000 in 2023, which is indeed a positive figure. Over the past 20 years, the company has shown a pattern of relatively consistent profitability, with net income increasing or remaining stable almost every year. The lowest net income was in 2006 at $1,090,000,000 and the highest in 2022 at $2,707,300,000. In this context, the positive net income in 2023 maintains General Mills' strong financial standing. Thus, GIS earns 1 point for positive net income under the Piotroski criterion.

Company has a positive cash flow?

Explain the criterion for General Mills (GIS) and why it is important to consider

Historical Operating Cash Flow of General Mills (GIS)

Analysing a company's cash flow from operations (CFO) is crucial as it indicates the cash-generating ability of the company's core operations. CFO provides insights into the liquidity position and operational efficiency, helping investors gauge the underlying health and long-term sustainability of the company.

Return on Assets (ROA) are growing?

Change in ROA (Return on Assets): Compare the ROA of 0.0829 in 2023 with the ROA of 0.086 in 2022. If the ROA increased in 2023, add 1 point; if not, set it to 0.

Historical change in Return on Assets (ROA) of General Mills (GIS)

The Return on Assets (ROA) for General Mills (GIS) has actually decreased from 0.086 in 2022 to 0.0829 in 2023. This trend is not ideal, leading to a score of 0 for this criterion. A healthy ROA indicates better efficiency in using assets to generate earnings. The possible reasons for the decline could be attributed to various factors, such as increased operational costs or ineffective asset utilization. Furthermore, when compared with the industry median ROA, which stands significantly higher at 0.282 in 2023, General Mills' performance appears less favorable. Over the last 20 years, despite some fluctuations, the industry's median ROA has generally stayed robust, marking a notable gap between GIS and its peers. Ultimately, this shortfall emphasizes areas where the company might need improvement or reassessment.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income criterion assesses whether a company's core business operations are truly profitable by comparing its net operating cash flow to net income.

Historical accruals of General Mills (GIS)

General Mills (GIS) reported an Operating Cash Flow of $2,778.6 million and a Net Income of $2,593.9 million for 2023, indicating that Operating Cash Flow is higher. This translates into a positive metric, reflecting that the company generates strong cash flow from its operations, enhancing its ability to manage liabilities, invest in growth, and return value to shareholders with greater certainty. Historically, GIS has mostly exhibited a consistent positive relationship between operating cash flow and net income, reinforcing the strength of its core operations. The historical operating cash flow for the last 20 years shows a general upward trend, with a significant peak in 2020 at $3,676.2 million, making the 2023 results relatively robust despite a slight dip compared to previous highs.

Liquidity of General Mills (GIS)

Leverage is declining?

The Leverage criterion examines the change in a company's financial leverage from one year to the next. Lower leverage suggests reduced financial risk.

Historical leverage of General Mills (GIS)

General Mills experienced an increase in leverage from 0.3018 in 2022 to 0.325 in 2023. This indicates a rise in financial obligations relative to equity, suggesting potential higher financial risk relative to the previous year. Historically, leverage metrics for General Mills have fluctuated. While the jump from 0.3018 to 0.325 may seem small, it suggests a movement away from the decreasing trend observed in recent years. Given the goal in this criterion is to see a reduction in leverage, General Mills scores 0 points here.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. An increasing current ratio indicates better liquidity.

Historical Current Ratio of General Mills (GIS)

For General Mills (GIS), the current ratio increased from 0.6346 in 2022 to 0.6869 in 2023. This rise is a positive trend, as it signifies improved liquidity. However, when comparing to the industry median current ratio of 1.6315 in 2023, it's clear that GIS's liquidity position lags behind significantly, indicating room for improvement. Thus, adding 1 point for the increase, but mindful that GIS should target higher figures more aligned with industry standards.

Number of shares not diluted?

The change in outstanding shares reflects how a company manages its equity. A decrease often indicates share buybacks, which can signal confidence in the company’s future.

Historical outstanding shares of General Mills (GIS)

The outstanding shares of General Mills (GIS) decreased from 607,500,000 in 2022 to 594,800,000 in 2023. This indicates a reduction in shares by 12,700,000, which corresponds to a decrement of approximately 2.09%. This is a positive sign, earning GIS 1 point in the Piotroski F-Score. A consistent trend of decreasing shares over the years, observed from the decline from 756,000,000 in 2003 to 594,800,000 in 2023, reinforces this positive outlook, illustrating effective capital management and potential shareholder value enhancement.

Operating of General Mills (GIS)

Cross Margin is growing?

Gross Margin is a critical measure of a company's financial health, indicating the proportion of revenue that exceeds the cost of goods sold

Historical gross margin of General Mills (GIS)

In 2023, General Mills (GIS) reported a Gross Margin of 0.3258 compared to 0.3371 in 2022. This represents a decrease, resulting in a score of 0 for this criterion. Examining the last 20 years, GIS historically maintained a strong Gross Margin, frequently outperforming the industry median. However, the recent decline needs attention, especially since the 2023 gross margin trails behind industry standards. This downward trend raises concerns over increasing production costs or pricing pressures.

Asset Turnover Ratio is growing?

Asset Turnover assesses a company's efficiency in using its assets to generate sales. An increase suggests better efficiency.

Historical asset turnover ratio of General Mills (GIS)

Comparing the Asset Turnover figures for General Mills (GIS), it is evident that the ratio increased from 0.6036 in 2022 to 0.6426 in 2023, an uptick of approximately 6.47%. This increase indicates that the company has improved its efficiency in using its assets to generate revenue. Over the last 20 years, the company's Asset Turnover has fluctuated, reaching its peak at 0.8377 in 2012. The 2023 figure puts it closer to the mid-range of its historical performance, an encouraging sign suggesting a trend of improved operational efficiency.


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