Does General Mills’ (GIS) Yogurt Sale Mark a Shift in Capital Allocation and Growth Strategy?

• Earlier this week, General Mills completed the sale of its North American yogurt division for US$2.1 billion, a move paired with plans to use proceeds for share repurchases and ongoing acquisition searches.
• The divestiture, which represented roughly 8% of total sales, signals a reshaping of General Mills' portfolio in pursuit of enhanced long-term growth and renewed operational focus.
• We'll examine how the asset sale and renewed acquisition appetite may reshape General Mills' investment narrative and long-term growth outlook.

These 11 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

General Mills Investment Narrative Recap

To be a General Mills shareholder, you need to believe in its ability to continuously reshape its portfolio and create long-term value, even when divesting sizable brands. The recent sale of the North American yogurt division, roughly 8% of sales, frees up capital for acquisitions and share buybacks but is not expected to materially alter the most important short-term catalyst: regaining volume and margin momentum through core product innovation. The main risk remains a prolonged period of weak volume growth under competitive pressures.

Earlier this month, General Mills kicked off a search for acquisitions, signaling that inorganic growth remains a priority alongside maintaining a stable dividend and buyback activity. This search for new assets may help offset the profit headwind from the yogurt divestiture, but investors will be watching closely to see if management’s acquisition targets deliver on the margins and visibility required to support future growth.

In contrast, one lingering risk for investors that shouldn’t be overlooked is the ongoing challenge of...

Read the full narrative on General Mills (it's free!)

General Mills is expected to generate $19.0 billion in revenue and $2.1 billion in earnings by 2028. This projection assumes a 0.8% annual decline in revenue and a decrease of $0.2 billion in earnings from the current level of $2.3 billion.

Uncover how General Mills' forecasts yield a $53.89 fair value, a 11% upside to its current price.

Exploring Other Perspectives

Fair value estimates from the Simply Wall St Community range from US$53.90 to US$104.80, based on 9 individual perspectives. While these valuations differ widely, the recent emphasis on acquisitions adds new variables to expectations for an earnings rebound.

Explore 9 other fair value estimates on General Mills - why the stock might be worth over 2x more than the current price!

Build Your Own General Mills Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your General Mills research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
• Our free General Mills research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate General Mills' overall financial health at a glance.

Looking For Alternative Opportunities?

Our daily scans reveal stocks with breakout potential. Don't miss this chance:

• We've found 20 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
• This technology could replace computers: discover 26 stocks that are working to make quantum computing a reality.
• Uncover the next big thing with financially sound penny stocks that balance risk and reward.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com