Reinvestment And Yoplait Closure Will Delay Margin Recovery

General Mills’ consensus price target has been cut from $62.46 to $55.20 as analysts react to lower FY26 earnings guidance, weak sales trends, and rising reinvestment costs, outweighing confidence in management’s strategy and brand resilience.

Analyst Commentary

• FY26 earnings guidance and outlook have been reset lower, with disappointing EPS expectations and a more second-half-weighted recovery timeline, contributing to near-term sentiment pressure.
• Analysts are concerned about weak U.S. scanner trends and decelerating organic sales, driven by lower volumes and retail performance, particularly in North America.
• Increased reinvestment spending has weighed on near-term margins but is viewed by some bullish analysts as necessary for supporting a sustainable turnaround in volume and profit growth.
• Relative valuation concerns persist, with analysts suggesting the stock is not attractively priced versus peers and that organic growth headwinds may prompt a further multiple de-rating.
• Bullish analysts highlight management’s price sensitivity, resilient brand strength, and the belief that lowered guidance embeds sufficient cushion for delivery even in a sluggish environment, offering potential upside as execution improves.

What's in the News

• General Mills continues to expand its core product portfolio with multiple limited-edition launches, including “Wicked”-inspired Pillsbury dough, Progresso Pitmaster BBQ soups, Cereal Training Camp football tie-ins with celebrity athletes, and Marvel’s “Fantastic Four” cereal boxes, along with unique collaborations such as Cinnamon Toast Crunch Bacon Flavored Cereal and branded sunglasses through Pit Viper (Key Developments).
• The company is strengthening its position in the fast-growing pet food segment, launching Blue Buffalo’s “love Made Fresh” fresh pet food across the U.S. and securing exclusive distribution of premium European pet food brand Edgard & Cooper with PetSmart (Key Developments).
• General Mills completed a major share buyback, repurchasing 5.2 million shares ($303.94 million) in the most recent tranche, totaling 63.1 million shares (11% of shares outstanding) for $4.43 billion since June 2022 (Key Developments).
• Fiscal 2026 guidance anticipates relatively flat organic net sales (down 1% to up 1%), while the board approved a 2% dividend increase to $0.61 per share, sustaining General Mills’ 126-year dividend track record (Key Developments).
• Industry-wide, major food companies like General Mills are under heightened scrutiny from the MAHA movement and government regulators for the health impacts of processed foods and ingredients, though industry leaders defend established safety processes and regulatory reviews (Wall Street Journal, Periodicals).

Valuation Changes

Summary of Valuation Changes for General Mills

• The Consensus Analyst Price Target has significantly fallen from $62.46 to $55.20.
• The Consensus Revenue Growth forecasts for General Mills has significantly fallen from -0.4% per annum to -0.7% per annum.
• The Net Profit Margin for General Mills has significantly fallen from 12.57% to 10.99%.