Key Takeaways
- By Nov. 12, Piper Sandler had downgraded General Mills to Neutral from Overweight and cut its price target to $35 from $41, citing risk to the dividend.
- Dividends took 85% of General Mills’ free cash flow over the 12 months to Aug. 30, and its debt is above management’s target.
- Analysts expect earnings to fall again this fiscal year, and the Street’s average target has dropped from $54 to $37 in a year.
- Piper’s downgrade looks right. The second-quarter report in December or a sale of Häagen-Dazs outside North America could change that.
By Nov. 12, Piper Sandler analyst Michael Lavery had downgraded General Mills (GIS) to Neutral from Overweight and cut his price target to $35 from $41, citing risk to the dividend from the company’s operating pressures. The shares were already 30% below their February high, and the dividend yields 7%.
The Dividend Is Eating Most of the Cash
General Mills has held its dividend at $0.61 a quarter since mid-2025, and over the 12 months to Aug. 30, those payments took 85% of its free cash flow. On the September call, CFO Kofi Bruce agreed that net debt sits a little over 4x EBITDA, and said getting back to the 3x target would take “at least a couple years.” He wouldn’t give an end date, but tied it to transformation goals that run through 2030.
Not Enough Cash for Both
Piper sees less room to fund growth and pay down debt, and analysts’ own numbers back that up. Their free cash flow forecasts leave about $1.6 billion after dividends from the second quarter of fiscal 2027 through fiscal 2029. Reaching 3x on fiscal 2029’s expected EBITDA would take about $3.6 billion less net debt. And EBITDA is heading the wrong way: analysts see it falling from $3.4 billion in fiscal 2026 to $3.1 billion in fiscal 2027.
TIKR Tracks 19 Analysts on General Mills. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on General Mills, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See General Mills’ Analyst Ratings
Does $35 Add Up for General Mills?
Most of the Street got there before Piper. The consensus target has fallen from $54 a year ago to $37, and individual targets now run from $30 to $45:
Nor do analysts see a quick earnings rebound. Adjusted EPS fell from $4.52 in fiscal 2024 to $3.55 in fiscal 2026. The consensus calls for $3.08 in fiscal 2027 and $3.15 in fiscal 2028, down from $3.21 three months ago:
A lot of that is already in the price. The stock trades at 11x forward earnings, against a 15x average over the last five years and a low of 9.7x in June:
Piper’s $35 is 11x fiscal 2028 estimates, the same multiple today’s $34.21 carries on fiscal 2027. In other words, Piper expects the stock to go nowhere.
Piper’s Right to Step Aside
The biggest risk to this call is a deal. The Wall Street Journal reported on Nov. 5 that General Mills is weighing a separation of its Häagen-Dazs business outside North America.
On current forecasts, keeping the dividend at $2.44 a year leaves too little cash to reach 3x by fiscal 2029 without selling something, and 2% earnings growth in fiscal 2028 won’t close that gap. With the stock just 2% under Piper’s target, I’d stay on the sidelines too.
The second-quarter report in December will show whether North American grocery sales are finally turning up.
So What Is General Mills Stock Actually Worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
