Food group General Mills (GIS) is set to release its Q1 earnings report this week. This has some investors wondering whether General Mills, famous for brands such as Cheerios and Golden Grahams, is a tasty stock to invest in beforehand.
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What Wall Street Expects
Wall Street is expecting GIS to announce quarterly earnings of $0.82, down from $1.07 in the same period last year. Revenues are expected to reach $4.52 billion, down from $4.85 billion last year.
Will GIS be able to beat these estimates? As we can see below, it has a very strong track record of doing just that.
Key Issues Ahead of Earnings
In its Q4 report, GIS reported revenues of $4.56 billion, which missed Wall Street’s estimate of $4.59 billion. It was also down 3% year-over-year from $4.71 billion. This was “driven by lower pound volume and unfavorable net price realization and mix.”
The revenue miss came despite General Mills’ adjusted earnings per share of 74 cents, which was above analysts’ estimate of 71 cents. Even so, investors weren’t pleased that the company’s adjusted EPS dropped 27% year-over-year from $1.10.
General Mills also reported Fiscal 2025 adjusted EPS of $4.21 alongside revenue of $19.49 billion. For comparison, Wall Street expected adjusted EPS of $4.18 on revenue of $19.5 billion.
The company said it expected adjusted EPS for its next fiscal year to drop 10% to 15% year-over-year. It also estimated that organic net sales will come in between a 1% decrease and a 1% increase.
The company is being hit by President Trump’s tariff policies, which impact ingredients and packaging materials arriving from Canada, Mexico and China. There are concerns over competition in the market driving prices down as inflation pushed costs up, as well as uncertain consumer confidence.
There has also been a lot of pressure from the U.S. government on the use of additives in food as it strives to ‘Make America Healthy Again.’
Thomas Palmer, analyst at JPMorgan recently downgraded General Mills to Underweight from Neutral with a price target of $45, down from $53, after assuming coverage. The firm assumed coverage of 24 stocks in the food producers, food retail, and agricultural products sectors with General Mills being one of its most cautious names. It said food producers are dealing with pressure from slower center-store category growth and market share losses.
Megan Alexander of Morgan Stanley also lowered the firm’s price target on General Mills to $48 from $49 and kept an Underweight rating on the shares. The firm expects General Mills to report relatively in-line Q1 results, creating a muted stock reaction.
Is GIS a Good Stock to Buy Now?
On TipRanks, GIS has a Hold consensus based on 5 Buy, 10 Hold and 3 Sell ratings. Its highest price target is $63. GIS stock’s consensus price target is $54.33, implying a 10.85% upside.
