General Mills, Inc. GIS has faced a turbulent few months, with its stock declining 12.3% over the past three months, significantly underperforming the industry’s 7.3% drop. This branded consumer food company also lagged the broader Zacks Consumer Staples sector’s decline of 3.7% and the S&P 500’s growth of 4% in the same period.

GIS Price Performance vs. Industry, S&P 500 & Sector

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Closing the trading session at $59.80 yesterday, General Mills stock stands closer to its 52-week low of $57.94, reached on Jan. 16. GIS is also trading below its 50 and 200-day moving averages, indicating potential weakness in the stock's momentum.

These aspects raise a crucial question for investors: Is this a temporary setback for General Mills, or does it signal deeper concerns? As the company works to navigate these headwinds, understanding its course and strategic priorities becomes important for those considering its long-term investment potential.

What’s Dragging Down General Mills Shares?

Like other food players such as Conagra Brands CAG, The J.M. Smucker SJM and The Campbell’s Company CPB, General Mills is grappling with inflationary pressures and a dynamic consumer landscape. GIS is also battling category-specific struggles. The company’s refrigerated dough business underperformed in the second quarter of fiscal 2025, failing to capitalize on seasonal baking demand. The company cited issues with price positioning, marketing effectiveness and product renovation efforts. To regain momentum, General Mills is increasing media spending by more than 40% in the third quarter, which adds further cost pressures.

General Mills’ International segment remains a trouble spot, with organic net sales declining 3% in the second quarter, driven by continued double-digit traffic declines in China for Haagen-Dazs shops due to macroeconomic headwinds and weakness in Brazil. While General Mills is trying to offset losses by expanding Haagen-Dazs into retail and e-commerce channels, the competitive landscape remains tough.

General Mills operates in a highly competitive and price-sensitive food industry. With elevated grocery inflation putting pressure on consumers, they have been trading down to private label brands, especially in categories like cereal and pet food. Continued cutting on discretionary food spending by price-conscious customers also remains a hindrance to volume recovery.

On its second-quarter earnings call, General Mills lowered its guidance for fiscal 2025 due to increased targeted promotional investments to enhance volumes and market share. Management expects a greater proportion of these investments to impact second-half performance. On Jan. 27, General Mills further updated its fiscal 2025 bottom-line guidance to reflect the impacts of its recent Canadian Yogurt business divestiture and North American Whitebridge Pet Brands acquisition. GIS now projects adjusted earnings per share (EPS) to decrease 4-2% at cc compared with its previous forecast of a 3-1% decline.

General Mills Estimates: Is More Pain Ahead?

The Zacks Consensus Estimate for General Mills’ earnings per share for the current and upcoming fiscal years has been revised downward over the past 30 days. This shift indicates a growing bearish outlook among analysts and highlights potential obstacles the company may face in meeting its profitability goals.
 

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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

GIS’ Growth Efforts to Ignite a Recovery?

Despite these challenges, General Mills remains committed to strengthening its market position and fostering long-term growth through a combination of strategic investments, portfolio optimization and operational efficiencies.

One of the company’s most promising segments is North America Pet, which returned to growth in the second quarter. The company’s Blue Buffalo brand has witnessed strong retail sales, particularly in the Life Protection Formula category. The company has also adjusted its pricing strategy for its wet pet food line, addressing consumer concerns over affordability while maintaining premium quality. General Mills’ acquisition of Whitebridge Pet Brands is another strategic move to expand its premium pet food offerings and bolster the company’s presence in the rapidly growing pet food industry.

In its North America Retail segment, General Mills is doubling down on brand marketing and product innovation to stay ahead of consumer trends. The company is putting increased focus on popular categories like cereal, fruit snacks, Mexican food and soup — areas where demand remains strong. The reintroduction of the Pillsbury Doughboy in marketing campaigns and increased media investments are expected to enhance brand engagement and improve sales momentum for the refrigerated dough business.

General Mills continues to leverage its Holistic Margin Management (“HMM”) program to generate cost savings, with expectations that HMM efficiencies will outpace input cost inflation for the year. In the second quarter of fiscal 2025, HMM cost savings aided the company’s adjusted gross margin, which expanded 130 basis points to 36.3%. By streamlining operations and enhancing supply-chain efficiencies, the company aims to maintain healthy profit margins despite ongoing economic challenges.

GIS Looks Attractive From a Valuation Standpoint

General Mills stock is currently trading at a P/E of 13.2X, lower than the industry’s multiple of 15.22X and the S&P 500’s 22.3X. This, combined with a Value Score of B, makes GIS look attractive from a valuation standpoint, particularly as the company continues to execute its strategic initiatives and make efforts to drive volume growth. The lower multiple suggests that near-term challenges may already be priced in, creating an opportunity for upside as fundamentals improve.

GIS Stock Valuation Versus Industry

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GIS Stock: Charting the Path Forward

General Mills faces notable short-term challenges, including inflationary pressures, category-specific headwinds and broader macroeconomic uncertainties. However, the company's long-term growth prospects remain solid, supported by strategic investments in innovation, portfolio expansion and cost optimization. While prospective investors may find it prudent to wait for a more favorable entry point amid current pressures, existing shareholders may benefit from holding the stock, given its long-term potential and compelling valuation. General Mills currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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