General Mills (GIS) Stock Forecast & Price Target

General Mills is showing early signs of a fundamentals recovery, with 1Q organic sales of -0.4% beating consensus by a wide margin and EPS of $0.75 topping expectations despite an 11% EBIT decline. The key driver of the positive outlook is improving North American Retail execution, where retail sales improved 200 bps to -2%, dollar share trends improved in most priority categories, and Cereal, Pillsbury, and Salty Snacks all performed well. Supportive growth in North American Foodservice and International, plus $750M of total cost savings and gross margin of 33.3%, suggests the company is better positioned to deliver on guidance and expand margins.

General Mills is facing weakening competitive footing as share losses in fruit snacks, Totino’s, and dog food show that its mature brands are struggling against insurgent competitors and changing consumer preferences. Margin pressure is also intensifying because inflation is expected to ramp to 6% in 4Q when hedges roll over, while management’s guidance for operating profit down -4% to +1% and the 15% decline in operating profit underscore limited pricing power and cost absorption. The pet segment adds further risk through -6% volume in North American Pet, retailer de-loading, and Love Made Fresh execution issues, making the company’s turnaround look slow and vulnerable to continued earnings disappointment.