On Thursday, Stifel revised its price target for General Mills (NYSE:GIS) shares, bringing it down to $70 from the previous $77, while still holding a positive outlook with a Buy rating. General Mills recently disclosed its fourth-quarter earnings per share (EPS) for fiscal year 2024, which showed a 10% decrease from the previous year to $1.01. However, the reported EPS was slightly above the consensus estimate by $0.02.
The company's North American consumption trends remained steady, but its overall organic sales experienced a sequential decline of 6%, attributed to several specific factors. Looking ahead to fiscal year 2025, General Mills is focusing on enhancing its competitive stance by increasing investments across its product portfolio. The company anticipates organic sales to range from flat to a 1% increase and expects EPS to vary between a 1% decrease and a 1% increase.
According to the analyst, the growth within General Mills' market categories is on an upward trajectory, which is expected to contribute to better organic sales throughout FY25, bolstered by the company's commitment to greater investments.
Furthermore, the analyst noted that General Mills' financial position is solid, providing ample opportunities for portfolio enhancement through strategic mergers and acquisitions (M&A) as well as divestitures.
Despite the reduction in the price target, Stifel's outlook on General Mills remains optimistic, as reflected in the maintained Buy rating and the new $70 price target.
In other recent news, General Mills reported a significant decline in quarterly sales, with net sales dropping to $4.71 billion, a decrease from the $5.03 billion recorded in the same period last year. The company also faces a lawsuit over alleged racial bias, with eight Black employees accusing the company of fostering a racially biased work environment.
Meanwhile, General Mills has acquired Edgard & Cooper, a leading European pet food brand, aligning with their strategy to foster sustainable growth and deliver value to shareholders. The company is also reportedly considering selling its North American yogurt business, including the well-known Yoplait brand, for an expected sum exceeding $2 billion.
Analysts have given General Mills a rating of "Sector Perform" with a price target of $72.00, maintaining this assessment despite the company's mixed financial performance. These are all part of recent developments affecting the company.
InvestingPro Insights
As General Mills (NYSE:GIS) navigates through its fiscal challenges, InvestingPro insights reveal some encouraging signs for investors. The company's management has demonstrated a commitment to shareholder value through aggressive share buybacks and has raised its dividend for 4 consecutive years, showcasing a reliable return to investors. Notably, General Mills has a track record of maintaining dividend payments for an impressive 54 consecutive years, which is a testament to its financial resilience and strategic planning.
From a valuation standpoint, General Mills is trading at a low earnings multiple, with an adjusted P/E ratio over the last twelve months as of Q3 2024 standing at 13.23. This could indicate a potential undervaluation relative to its earnings capacity.
Moreover, the company is trading near its 52-week low, which might present a buying opportunity for long-term investors seeking to capitalize on price recoveries. Analysts also predict that General Mills will remain profitable this year, which is corroborated by its profitability over the last twelve months.
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