Please ensure Javascript is enabled for purposes of website accessibility

Why General Mills' Shares Jumped 15.1% in the First Half of 2020

By Travis Hoium – Updated Jul 9, 2020 at 8:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Food sales aren't suffering during the pandemic.

What happened 

Shares of General Mills (GIS 0.09%) were up 15.1% in the first half of 2020, according to data provided by S&P Global Market Intelligence, as the company performed well during the COVID-19 pandemic. 

So what 

That makes sense, since General Mills' products are performing well in grocery stores, more than offsetting losses in restaurant sales. That's exemplified by the company's 21% increase in sales in the fiscal fourth quarter, which ended May 31. Organic sales were even up an impressive 16%, a rate you wouldn't normally see in the food business. 

Person shopping in a grocery store.

Image source: Getty Images.

Convenience and food-service sales struggled as restaurant sales declined, resulting in a 24% drop. But North American retail grocery sales were up 36% and pet sales jumped 37% versus a year ago. There doesn't seem to be an end in sight to the pandemic, so the increase in sales may last for a while.

Now what 

It's hard to see how General Mills doesn't come out of COVID-19 a winner when compared with most other companies. And shares now trade at just 17.7 times trailing earnings, a ratio that could drop if the recent increase in sales and earnings holds. This may not be a high-growth stock long term, but it may be one of the best value stocks on the market. 

Travis Hoium has no position in any of the stocks mentioned and has a family member who works at General Mills. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.