General Mills Stock Set For Worst Day In Years Following Weak Outlook

GIS is on track to for a six-day losing streak

Managing Editor
Mar 21, 2018 at 9:48 AM
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General Mills, Inc. (NYSE:GIS) stock is cratering today, down 7.9% at $45.96, and earlier touching a five-year low of $44.80, after the company reported fiscal third-quarter earnings this morning. While earnings and sales beat expectations, the company slashed its full-year profit outlook. The packaged food giant cited high costs in freight and commodities as reasons for the lowered outlook. 

General Mills stock has now shed 24% in 2018, with breakout attempts thwarted by the descending 20-day moving average since early February. Thanks to today's downbeat news, the equity is on track for a sixth straight loss and its worst single-day session since 2009.

This technical weakness has led to a bearish bias across Wall Street. For instance, just three of 16 covering analysts recommend buying the security, and short interest has been exploding higher for more than a year. In fact, the number of GIS shares held by short sellers is now at the highest point on record, following a 5% uptick during the two most recent report periods. Based on average daily volumes, it would now take short sellers a week to cover their positions.

In the options pits, there has been a put-heavy approach lately. This is evidenced by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that shows the equity with a 10-day put/call volume ratio of 1.40, which ranks in the 82nd percentile of its annual range. Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.57 ranks 2 percentage points from a 52-week high, suggesting near-term options traders are more put-heavy than usual.

 

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