General Mills $GIS slid lower on Wednesday after reporting mixed earnings.
The company's margins are contracting because of inflationary pressures. Last quarter alone, the gross margin fell 60 basis points to 33.4% of net sales.
In addition, the North American, pet, and international segments experienced a 7%, 5%, and 4% decrease in net sales, respectively. It wasn't good...
The management team discussed consumer confidence at levels last seen in 2008. This is a big problem for a company directly exposed to the consumer!
Overall, this report was a disaster, and the market punished the stock for it.
Here are the earnings stats from the report 👇
*click the image to enlarge it
As you can see, the $32.63B packaged foods company reported revenues of $4.84B, versus the $4.95B estimate, and earnings per share of $1, versus the $0.96 estimate.
The stock fell 2% with a reaction score of -2.99, and it's now flirting with fresh 4-year lows.
Now, let's talk about the technical setup.
GIS has been punished for 7 of its last 10 earnings reports 👇
General Mills has suffered a drawdown of over 30% since it peaked in the spring of 2023. It's now flirting with the resolution of a textbook multi-year distribution pattern.
Adding to the bearish case, the market has consistently punished the stock for reporting earnings. This means the fundamentals are supporting the technical downtrend.
If GIS is below 60, the path of least resistance is lower for the foreseeable future.
