Stock Decline Amid Positive Earnings

General Mills (GIS) saw its shares tumble over 2% in pre-market trading on Wednesday, despite reporting robust financial results for the first quarter of fiscal 2026. The company achieved sales of $4.52 billion, slightly surpassing analyst expectations of $4.51 billion. While demand showed signs of recovery following price reductions on certain products, the company still experienced a 7% year-over-year decline in net sales, with around four percentage points of this drop attributed to recent divestitures and acquisitions.

Profits Jump, But Not Without Controversy

In Q1, General Mills celebrated a significant rise in operating profit, soaring to $1.7 billion—a staggering 108% increase from the previous year. However, this impressive figure was largely fueled by a $1.05 billion gain from the divestiture of its yogurt business. When adjusted for constant currency, the operating profit fell by 18%, landing at $711 million. The diluted earnings per share (EPS) jumped 116% to $2.22, again influenced by one-time gains, while adjusted EPS showed a more troubling story, dropping 20% to $0.86 in constant currency.

Steady Guidance Amid Challenges

Despite the mixed signals, General Mills reaffirmed its full-year projections for sales and profits. The company anticipates an adjusted profit decline of 10-15% in constant currency, with organic net sales expected to remain flat, indicating only minor fluctuations. CEO Jeff Harmening emphasized the company’s primary goal this year is returning to organic sales growth through innovative product launches, enhanced marketing, and competitive pricing strategies, noting early successes in maintaining or growing market share in eight of its top ten U.S. categories.

Navigating a Tough Market Environment

However, the CEO also cautioned that anticipated category growth might lag behind long-term targets due to a challenging market for consumers. With various economic factors at play, the outlook for the food industry remains uncertain.

Should You Invest in General Mills?

As for whether General Mills is a wise investment, current consensus from TipRanks suggests a 'Hold' rating for GIS stock, based on five bullish picks, ten holds, and three sells over the past three months. At its present price of $54.33, analysts project a potential upside of 9.6% for the stock, though these insights are subject to revision following the latest earnings report.