On Monday, Citi updated its outlook on General Mills (NYSE:GIS) shares, increasing the price target to $76 from the previous $68 while maintaining a Neutral rating on the stock. The adjustment comes ahead of the company's scheduled earnings report for the first quarter of fiscal year 2025 on Wednesday, September 18.
The financial firm anticipates that General Mills will report operating sales growth (OSG) and earnings per share (EPS) that exceed the consensus estimates from Visible Alpha. This expectation is primarily due to an improvement in the company’s retail takeaway trends in its North America Retail segment.
Moreover, factors such as cost of goods sold (COGS) productivity and mild inflation are projected to contribute to the EPS upside, trends which have recently benefited other companies in the food industry.
Citi also expects that General Mills will reaffirm its full-year guidance for fiscal 2025. Although a strong performance in the first quarter may not come as a surprise to investors, given the management's optimistic outlook expressed at an investor conference earlier in the month, Citi believes that the stock could still see an upward movement following the earnings announcement.
The forthcoming earnings report will likely provide further insight into General Mills' performance and its potential trajectory in the near term. Investors will be watching closely to see if the company's results align with Citi's projections and whether the positive trends identified will continue to support the stock's value.
In other recent news, General Mills has divested its North American Yogurt business for $2.1 billion to French dairy companies Lactalis and Sodiaal. The sale, which is expected to close in 2025, is part of the company's strategic reshaping. The transaction is projected to be 3 percent dilutive to General Mills' adjusted earnings per share in the first 12 months post-closure, excluding one-time impacts and transaction costs.
Mizuho reaffirmed its Neutral stance on shares of General Mills, in light of the divestiture. Deutsche Bank, Jefferies, and Evercore ISI have also maintained their Hold ratings on the company, with Deutsche Bank raising its price target to $70. However, Argus downgraded General Mills' stock from Buy to Hold due to ongoing volume weaknesses and inflationary pressures.
In addition, General Mills has appointed Asheesh Saksena as Chief Strategy & Growth Officer and is considering potential mergers and acquisitions in the $1 billion to $1.5 billion range. These are recent developments that investors should be aware of.
InvestingPro Insights
As General Mills (NYSE:GIS) approaches its earnings report, insights from InvestingPro reveal a company with a robust history of shareholder returns and a strong management strategy. Notably, General Mills has consistently maintained dividend payments for 54 years, with a current dividend yield of 3.26%. This commitment to returning value to shareholders is further exemplified by an 11.11% dividend growth over the last twelve months as of Q4 2024. Additionally, the management's aggressive share buyback strategy signals a confident outlook on the company's valuation.
From a financial perspective, General Mills boasts a market capitalization of $41.03B and a price-to-earnings (P/E) ratio of 16.97, which adjusts to a slightly more attractive 15.16 when considering the last twelve months as of Q4 2024. While the company's revenue has seen a slight decline of 1.18% in the same period, the gross profit margin remains strong at 35.01%, indicating efficient cost management.
Investors considering General Mills' stock will find additional insights with the full suite of InvestingPro Tips, which include predictions of profitability for the current year and an analysis of the company's liquidity position. For a deeper dive into General Mills' financial health and strategic moves, more InvestingPro Tips are available at: https://www.investing.com/pro/GIS.
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