Established in 1866, Minneapolis-based General Mills, Inc. (GIS) is a renowned global manufacturer and marketer of branded consumer foods distributed through retail outlets worldwide. Commanding a market cap of about $38.8 billion, the company offers a diverse product lineup spanning over 100 brands. This includes an array of options such as ready-to-eat cereals, convenient meals, snacks, yogurt, premium ice creams, baking mixes, and a variety of ingredients.
Shares of General Mills have significantly underperformed the broader market over the past 52 weeks. GIS’ shares have declined 19.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 28.9%. However, in 2024, this gap has narrowed, with GIS’ shares up 4.9%, compared to the SPX's 11.2% gains on a YTD basis.
Zooming in further, GIS is also lagging behind the S&P 500 Cons Staples Sector SPDR’s (XLP) 4.6% gains over the past 52 weeks and 7% return on a YTD basis.
General Mills' relative underperformance over the past year can be attributed to sticky inflation which has weighed down on the company’s topline performance over the recent quarters. Despite the company’s efforts to counter inflation by raising product prices, this tactic backfired as consumers opted for more affordable alternatives, leading to a decline in quarterly sales.
Nevertheless, despite another quarter of declining net sales revealed in the Q3 earnings results on March 20, General Mills managed to exceed Wall Street estimates on both top and bottom lines. This impressive performance spurred a 1.2% surge in its shares on the same day.
For the current fiscal year, ending in May, analysts expect GIS’ EPS to grow by 4.9% to $4.51. The company's earnings surprise history is excellent. It topped the consensus estimate in each of the last four quarters.
Among the 18 analysts covering the stock, the consensus rating is a “Hold.” That’s based on four “Strong Buy” ratings, 13 “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than three months before, with three analysts suggesting a "Strong Sell."
On April 29, Barclays reaffirmed its “Hold” rating on General Mills, setting a price target of $72. This target indicates a potential upside of 5.4% from the current price levels.
The mean price target of $71.18 represents a premium of just 4.2% to GIS’ current levels. The Street-high price target of $77, reiterated by Stifel Nicolaus last month, suggests a 12.7 % potential upside from the current price levels.
On the date of publication, Anushka Mukherjee did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
