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General Mills Stock Near Its 52-Week Low: Is it a Good Buy After Beating Expectations in Q1?

General Mills (NYSE:GIS) recently released its first-quarter earnings, surpassing both sales and profit expectations. The company, known for its diverse range of products including breakfast cereals, snack bars, and pet food, once again demonstrated its strong pricing power as it was able to increase the price of its products to battle inflation while still benefiting from strong demand.

By implementing multiple price hikes over the past year, General Mills managed to offset rising costs. This strategy has paid off as its gross margin improved by 540 basis points to 36.1%. Sales in North America were up 4% on an organic basis as the company rebuilt its inventory levels.

But it wasn’t all smooth sailing for the company. Overall market share fell in North America compared to a year ago. Another challenge is in its pet food segment where sales were flat and the company observed that consumers were moving towards cheaper and smaller products in order to reduce spending.

Year to date, shares of General Mills are down 23%. It is now trading near its 52-week low and the stock yields 3.6%. At 16 times earnings, the stock isn’t overly expensive as the S&P 500 average multiple is 20.

Investors looking for a stable dividend-paying stock might find General Mills appealing, especially given its ability to navigate through rising costs and its high yield. But it may not be an ideal option for growth investors given its market share is declining and there could be more resistance from consumers in future quarters as economic conditions potentially worsen.