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General Mills: Analysts Expect the Stock to Decline

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Analysts’ recommendations

Analysts have a consensus target price of $45.35 per share on General Mills (GIS) stock, which implies a downside of 3.3% based on its closing price of $46.91 on March 11. Among the analysts covering General Mills stock, most of them prefer to remain on the sidelines. Among the 18 analysts, 13 recommended a “hold,” four recommended a “buy,” and one recommended a “sell.”

Analysts continue to maintain a “neutral” outlook on most food stocks. Weakness in the base business, cost headwinds, and pressure on the earnings keep analysts on the sidelines. Analysts have a “neutral” recommendation on Kellogg (K), Kraft Heinz (KHC), J.M. Smucker (SJM), and Hershey (HSY) stock. Most of the analysts recommended a “sell” on Campbell Soup (CPB) stock.

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Is the valuation a concern?

General Mills shares have risen 20.5% on a YTD basis. The stock trades at 15.3x its fiscal 2019 estimated EPS of $3.07, which looks expensive given the projected decline in its fiscal 2019 EPS. General Mills stock trades at 14.5x its fiscal 2020 estimated EPS of $3.24, which also looks expensive given a projected growth of 5.5% in its EPS and a dividend yield of 4.2%.

Other major food stocks including Kellogg, J.M. Smucker, Kraft Heinz, and Conagra Brands are trading at a lower valuation multiple than General Mills.

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