Over the past six months, General Mills’s stock price fell to $49.70. Shareholders have lost 15.5% of their capital, which is disappointing considering the S&P 500 has climbed by 5.8%. This may have investors wondering how to approach the situation.

Is now the time to buy General Mills, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Is General Mills Not Exciting?

Even though the stock has become cheaper, we're cautious about General Mills. Here are three reasons why GIS doesn't excite us and a stock we'd rather own.

1. Demand Slipping as Sales Volumes Decline

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

General Mills’s average quarterly sales volumes have shrunk by 1.6% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect General Mills’s revenue to drop by 4.2%, a decrease from This projection doesn't excite us and suggests its products will face some demand challenges.

3. EPS Barely Growing

Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

General Mills’s unimpressive 2.2% annual EPS growth over the last three years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Final Judgment

General Mills isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 12.7× forward P/E (or $49.70 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.

Stocks We Like More Than General Mills

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