On Thursday, BofA Securities adjusted its outlook on General Mills (NYSE: NYSE:GIS), increasing the price target from $68.00 to $72.00, while keeping a Neutral rating on the stock. The revision came after General Mills reported third-quarter earnings for fiscal year 2024 that surpassed Wall Street's expectations for both sales and operating margin.
"Coming into the print, eyes were on North America Retail (NAR) and Pet performance, both of which realized higher 3Q sales vs BofA estimates," said the analyst.
The NAR segment benefited slightly from retailer inventory adjustments, high single-digit growth in Canada, and mid single-digit growth in untracked channels, which helped to offset low single-digit declines in tracked channels. Meanwhile, the Pet segment saw enhancements in its Life Protection Formula dry dog food line and a modest quarter-over-quarter improvement in its Blue brand.
In light of these results, BofA Securities has revised its adjusted earnings per share estimate for General Mills for the fiscal year 2024 to $4.50, up from the previous estimate of $4.48. The firm also maintained its adjusted earnings per share estimates for fiscal years 2025 and 2026 at $4.53 and $4.79, respectively.
The raised price objective of $72.00 is grounded on a 15.0 times multiple of the firm's calendar year 2025 estimated earnings per share. BofA Securities underscored that this valuation appropriately reflects the near-term volume pressures that General Mills is facing, while also taking into account the positive growth prospects for the company in key regions and categories moving forward.
InvestingPro Insights
Following BofA Securities' revision of General Mills' (NYSE: GIS) price target, InvestingPro data reveals additional dimensions of the company's financial health and market performance. With a robust market capitalization of $39.19 billion and a P/E ratio of 15.19 based on the last twelve months as of Q2 2024, General Mills exhibits stability in the eyes of investors. The company's revenue growth of 4.3% during the same period underlines a consistent business expansion, despite a slight quarterly dip of -1.56% in Q2 2024.
Dividend investors might find General Mills particularly appealing, as the company has not only maintained its dividend payments for an impressive 54 consecutive years but has also increased its dividend for 4 consecutive years, with a notable dividend growth of 9.26% over the last twelve months as of Q2 2024. This commitment to returning value to shareholders is further reflected in a healthy dividend yield of 3.4%.
For those considering the stock's current momentum, an InvestingPro Tip points out that the Relative Strength Index (RSI) suggests General Mills is in overbought territory, which could signal caution for potential short-term investors. Moreover, while the company has been proactive in repurchasing shares, another InvestingPro Tip highlights a potential liquidity risk, noting that short-term obligations exceed liquid assets.
To gain deeper insights and uncover additional InvestingPro Tips for General Mills, interested investors can explore the full range of analytics and expert opinions. With 7 more tips available on InvestingPro, users can make informed decisions using comprehensive data. Don't forget to use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, helping you stay ahead in the investment game.
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