General Mills Stock Falls on Sales Miss, Peers Follow Suit

Key takeaways

General Mills (GIS) released its fourth-quarter fiscal 2019 (ended May 26) results on June 26. Its performance was mixed, with its bottom line growing healthily and exceeding Wall Street’s estimate for a sixth consecutive quarter despite margin pressure and a higher outstanding share count. Its profit margins contracted year-over-year, reflecting input cost inflation, weak volumes, and higher supply-chain costs.

General Mills Stock Falls on Sales Miss, Peers Follow Suit

Although General Mills’ revenue continued to grow briskly, driven by incremental sales from its acquisition of Blue Buffalo, its fell short of analysts’ estimate and dragged down its stock by 4.5% to $51.31 on June 26.

General Mills’ lower-than-expected sales weighed on other major packaged food company stocks. On June 26, J.M. Smucker (SJM), Kellogg’s (K), Hershey (HSY), Mondelēz International (MDLZ), and Campbell Soup (CPB) fell 3.8%, 2%, 2.2%, 1.8%, and 1.4%, respectively.

Stock performance this year

Despite falling 4.5% on June 26, General Mills stock is up 31.8% year-to-date and has outperformed broader markets, supported by its impressive bottom-line growth amid margin pressure. However, slower net sales and earnings growth could limit its upside.