How are energy investors positioned?
On Tuesday, Piper Sandler adjusted its outlook on General Mills (NYSE:GIS) shares, reducing the price target from $84.00 to $71.00 while still maintaining an Overweight rating on the stock. Currently trading at $61.34, InvestingPro analysis suggests the stock is slightly undervalued, despite nine analysts recently revising their earnings estimates downward. The revision reflects concerns about slower sales growth and inventory reductions by retailers. General Mills is facing several challenges that are expected to impact its third fiscal quarter of 2025 earnings (F3Q25E), particularly in its North American Retail (NAR) and Pet segments due to the said de-stocking. The company, with a market capitalization of $33.8 billion, is experiencing weaker sell-through momentum in both of these segments, with its next earnings report scheduled for March 19, 2025.
Piper Sandler also noted potential risks stemming from regulatory uncertainty, especially regarding tariffs. The primary concern is the possibility of retaliatory tariffs from Canada, as General Mills’ products sold there are manufactured in the United States. However, the impact in China remains muted, with sales momentum continuing to be soft.
Despite these headwinds, there may be some relief for General Mills from expected savings due to lower incentive compensation in the fiscal year 2025 estimates (F25E). As a result, Piper Sandler has lowered its F25E earnings per share (EPS) forecast from $4.39 to $4.32 and its fiscal year 2026 estimates (F26E EPS) from $4.53 to $4.35.
The new price target of $71.00 is based on a revised multiple of approximately 15.5 times earnings, which has been reduced from the previous multiple of roughly 17.5 times. Currently trading at a P/E ratio of 13.26x, the stock offers a compelling dividend yield of 3.91% and has maintained dividend payments for 55 consecutive years. This adjustment aims to bring General Mills’ valuation more in line with the broader valuation expectations of large-cap consumer peers, factoring in the anticipated slower growth in top-line revenue. For deeper insights into General Mills’ valuation metrics and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, General Mills has completed the sale of its Canadian yogurt operations, including the Yoplait and Liberté brands, to Sodiaal. This divestiture is part of the company’s strategic efforts, as it also plans to finalize the sale of its U.S. yogurt business to Lactalis within the 2025 calendar year. Alongside these moves, General Mills has revised its fiscal 2025 outlook, now projecting a decrease in adjusted diluted earnings per share between 4% and 2% in constant currency. This adjustment is attributed to increased interest expenses from its acquisition of North American Whitebridge Pet Brands.
In its second-quarter fiscal year 2025 earnings report, General Mills reported a 12% rise in earnings per share to $1.40, surpassing analyst expectations. Despite this, the company has adjusted its full-year 2025 guidance downward, anticipating a decline in organic sales and adjusted earnings before interest and taxes. Stifel has maintained a Buy rating on General Mills, lowering its price target to $78, citing confidence in the company’s long-term prospects despite short-term challenges.
Conversely, Bernstein SocGen Group has reduced its price target to $68, maintaining a Market Perform rating, while Mizuho (NYSE:MFG) has upheld its Neutral stance with a $72 price target. These adjustments reflect concerns over the company’s revised earnings projections and increased reinvestment strategies. Additionally, board member C. Kim Goodwin will not seek reelection, as disclosed in a recent regulatory filing, prompting the company to consider a new candidate for the board.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.