General Mills (GIS): Taking Stock of Valuation After a Better-Than-Expected Q2 Earnings Report

General Mills, Inc. just delivered a fiscal second quarter that beat Wall Street on both earnings and revenue, even though sales and profit slipped year over year, and that mix is exactly why the stock deserves a closer look.

See our latest analysis for General Mills.

The better than expected quarter gave the share price a modest bump, but with a year to date share price return of about minus 26 percent and a five year total shareholder return of roughly minus 5 percent, sentiment still looks cautious rather than euphoric, even as new product launches and price cuts hint at a potential reset in the growth story.

If this earnings driven reset in expectations has you rethinking your watchlist, it could be a good moment to explore fast growing stocks with high insider ownership.

With earnings beating lowered expectations, a steep share price slide, and a double digit discount to analyst targets, is General Mills now a mispriced value play, or has the market correctly anticipated weaker growth ahead?

Most Popular Narrative: 11.3% Undervalued

With General Mills last closing at $47.02 against a narrative fair value of about $53, the story hinges on how reinvestment shapes future profitability.

General Mills plans a sizable step up in investment for fiscal '26, including at least 5% through Holistic Margin Management savings and $100 million in additional cost savings. However, reinvestment of these savings into pricing, innovation, in store activity, and media could delay improvements in net margins and overall earnings in the short term.

Read the complete narrative.

Curious why a business facing shrinking earnings and softer revenue assumptions can still warrant a premium to today price? The answer lies in its long term margin math, disciplined buybacks, and a future earnings multiple usually reserved for healthier growers.

Result: Fair Value of $53 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, stronger than expected volume recovery in core cereals and snack bars, along with successful high impact innovations, could quickly challenge the cautious margin reset narrative.

Find out about the key risks to this General Mills narrative.

Build Your Own General Mills Narrative

If you see the story differently, or would rather dig into the numbers yourself, you can build a custom view in minutes with Do it your way.

A great starting point for your General Mills research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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