Why General Mills Is Still a Buy Despite Its Earnings Miss

Branded food giant General Mills (NYSE: GIS) saw its stock price drop more than 4% on Dec. 21 when it reported an earnings miss in its fiscal 2022 second quarter (Q2). While its shares have bounced back somewhat since then, the factors leading to its earnings miss -- inflation, rising expenses, and its decision not to raise prices -- all remain.

However, the company still has a lot going for it and is worth a look as a longer-term  investment. Here are two important takeaways from its current situation.

Triggering Wall Street disfavor, General Mills saw net earnings drop 13% year over year to $597 million in the second quarter. The culprit: rising expenses. The company saw a 400 basis-point drop in gross margins and a 350 basis-point decline in operating margins. These drops would have been higher if General Mills hadn't raised its prices somewhat, but those increases still weren't enough to cancel out the surge in expenses. Meanwhile, revenue was up 6% over last year's second quarter.

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Source Fool.com