GIS Stock Plunges More Than 18% in 6 Months: What Should You Do?

General Mills, Inc. GIS is facing a rough patch, with its stock down 18.5% over the past six months. This decline is steeper than the 9.4% drop in the industry, the 2% fall in the Zacks Consumer Staples sector and the 6.9% decrease in the S&P 500 during the same period. The downturn reflects a combination of broader market headwinds and specific issues within the company, raising concerns about its prospects.

What’s Behind General Mills’ Stock Derail?

General Mills is navigating a tough landscape in the highly competitive and price-sensitive packaged food industry. With grocery inflation still running high, cost-conscious consumers are increasingly shifting toward lower-priced private-label brands — especially in staple categories like cereal and pet food. This trend, combined with reduced discretionary food spending, has made it harder for the company to drive volume growth.

The impact of these challenges was clearly visible in General Mills' third-quarter fiscal 2025 performance. Net sales dropped 5% to $4,842.2 million due to lower pound volume and an unfavorable foreign exchange impact. Organic net sales were also down 5%, hurt by retailer inventory reductions across North America Retail and Pet, sluggish demand in the U.S. snacking segment, and continued weakness in away-from-home food channels.

In the U.S. snack category, growth slowed amid intensified competition and weaker overall demand in the fiscal third quarter. The company also saw lower sales in foodservice channels, weighing on performance in its North America Foodservice segment. General Mills continues to face headwinds across International markets — especially in China, where a weak consumer environment and reduced foot traffic impacted premium brands like Haagen-Dazs. These ongoing pressures across domestic and global markets underscore the company’s struggle to maintain momentum in a challenging economic environment.

GIS Price Performance

Cost Concerns Add More Pain to GIS

General Mills continues to face significant inflationary headwinds impacting the broader food industry. While the company has taken proactive steps to manage expenses through its Holistic Margin Management strategy, cost inflation remains a major challenge. In the fiscal third quarter, the adjusted gross margin contracted 60 basis points (bps), reaching 33.4% of net sales, mainly due to input cost inflation, unfavorable net price realization and mix, and supply chain deleverage. General Mills’ operating profit dropped 2% to $891 million, impacted by reduced gross profit dollars and increased SG&A expenses.

Challenging Outlook for General Mills

General Mills has signaled a more challenging path ahead as macroeconomic uncertainty continues to shape consumer behavior. During its last earnings call, the company acknowledged the ongoing volatility and its potential impact on fourth-quarter fiscal 2025. Following weaker-than-expected fiscal third-quarter results, it had revised its full-year outlook downward.

For fiscal 2025, organic net sales are now projected to decline between 2% and 1.5%, compared to the earlier expectation of the lower end of a range between flat and 1% growth for fiscal 2025. The adjusted operating profit and adjusted earnings per share (EPS) are now anticipated to decline between 8% and 7% in constant currency, a revision from the prior forecast of a 2-4% decline, indicating lower net sales.

How are Estimates Shaping Up for GIS?

Reflecting a cautious sentiment around General Mills, the Zacks Consensus Estimate for EPS has seen downward revisions. Over the past 30 days, the consensus estimate has declined by 16 cents to $4.20 per share for the current fiscal and 36 cents to $4.04 per share for the next fiscal. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Conclusion

General Mills is struggling amid persistent inflation, shifting consumer preferences and increased market competition, which have all contributed to a significant decline in its stock performance. The company’s disappointing sales, especially in the snacks and foodservice segments, are a major concern. With a downgraded outlook and growing uncertainty ahead, it must take swift action to address these challenges. At present, the company holds a Zacks Rank #4 (Sell), signaling ongoing challenges in the near term.

Stocks to Consider

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus estimate for United Natural’s current financial-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.

Utz Brands UTZ engages in the manufacture, marketing and distribution of snack foods in the United States and presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 8.8%, on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year sales and earnings indicates growth of 1.2% and 10.4%, respectively, from the year-ago numbers.

BRF S.A. BRFS raises, produces and slaughters poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank of 2. BRFS delivered a trailing four-quarter earnings surprise of 9.6%, on average.

The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year sales indicates growth of 0.3% from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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