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Why General Mills Stock Could Remain Pressured


Oct. 5 2018, Updated 10:08 a.m. ET

Wall Street’s recommendations

Wall Street analysts maintain a neutral outlook on General Mills (GIS) stock. Among 19 analysts covering General Mills stock, 14 analysts suggest a “hold,” four analysts recommend a “buy,” and one analyst recommends a “sell.”

Analysts have a target price of $48.17 per share on GIS stock, which implies a potential upside of 12.0% based on its closing price of $43.00 on October 3.

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What could stall a rebound in General Mills stock?

Analysts’ consensus target price indicates a 12.0% upside in General Mills (GIS) stock. Given the company’s recent financial performance and tepid outlook, it seems that General Mills could disappoint analysts.

General Mills’ top line is gaining from its recent Blue Buffalo acquisition. However, its organic sales growth is low. Weak margins and pressure on earnings further dent investor sentiment. General Mills’ fiscal 2019 top line is expected to mark 9.0%–10.0% growth, driven primarily by this acquisition. The company’s fiscal year ends in May.

However, its organic sales are expected to remain muted. The company’s management expects its organic sales to stay flat or increase by 1.0%. The company’s base business is expected to remain weak, which could hurt its organic sales growth rate.

General Mills’ (GIS) sales for the second quarter of fiscal 2019 could face tough year-over-year comparisons. This trend could lead to a deceleration in its net sales growth rate during the second quarter.

The company expects its adjusted EPS to remain flat or decline by 3.0% in fiscal 2019. This trend reflects increased cost pressure on margins and higher interest expenses stemming from the financing of its Blue Buffalo acquisition.


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