General Mills shares fell almost 22% in September after a fiscal first-quarter report showed shrinking core sales and reaffirmed guidance. The sell-off deepened after the company named an internal successor as its next chief executive.
A disappointing earnings report and a leadership change left investors cold at the maker of Cheerios, Chex and Häagen-Dazs. General Mills has struggled to keep pace with shifting consumer tastes, and September's news added to that pressure.
Sales slip even as estimates beat
On Sept. 23, General Mills reported net sales of $4.4 billion and non-GAAP earnings per share of $0.75 for its first quarter of fiscal 2027, topping analyst estimates on both lines. Despite the beat, both figures fell year over year, and each of the company's three U.S. business units posted sales declines.
The company also reaffirmed its full-year 2027 guidance. Management expects net sales to range from a 1.5% decline to a 0.5% increase versus fiscal 2026. It also projects adjusted earnings per share of $3 to $3.20, down from fiscal 2026's $3.55.
Analysts trim price targets
Several analysts cut their price targets after the results. Bank of America's Peter Galbo lowered his target to $40 from $43 while keeping a neutral rating. Bernstein SocGen's Alexia Howard trimmed her target by $1 to $30, maintaining her underperform rating on the stock.
A new CEO from within
On the last day of September, General Mills named Dana McNabb, a 27-year company veteran currently serving as chief operating officer, to succeed outgoing CEO Jeff Harmening starting Jan. 1. Promoting from within can reassure investors in a thriving company, but in a struggling one it often raises doubts about whether real change is coming.
Shares closed at $32.01, within a 52-week range of $31.18 to $51.26. That gives the company a market cap of $17 billion. The stock now carries a dividend yield of 7.70%.
Source: The Motley Fool
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