Should You Buy General Mills Stock For Its Cash?
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At 8.4%, the free cash flow yield on General Mills (GIS) stock is twice the 4.2% for the median S&P 500 company. Such a high yield means one of two things: a business on sale or one the market expects to shrink. General Mills is harder to read because of its large debt. So how much of that cash is really yours as a shareholder?
How Much Of General Mills’ Cash Is Yours?
As a shareholder, you own a slice of the free cash a business produces, just as you own part of its earnings, whether or not that cash is paid out. Cash kept in the company still belongs to you. Share prices usually rise once investors start to count that cash, and they rise further when it is growing.
General Mills generated $1.55 billion of free cash flow in the twelve months ended August 30, 2026. Lenders come first on part of that cash because the company’s net debt, its borrowings minus its cash, stood at $13.2 billion, equal to 72% of its market value. Measured against market value plus net debt, the yield is 4.9%.
General Mills Makes Its Cash From Packaged Food
Snacks was its largest segment in fiscal 2026, producing $4.14 billion of revenue. Pet brought in $2.77 billion, up 7.0% from a year earlier. General Mills spent only 25.2% of its cash from operations on capital spending over the last twelve months, so most of that cash was left free.
The company produced free cash in each of the 13 twelve-month periods ending from August 2023 to August 2026, but the amount has shrunk. Free cash flow fell from $2.78 billion in the twelve months ended August 2024 to $2.1 billion a year later, and fell again in the latest twelve months. Its net debt is about 4.8 times its twelve-month operating income of $2.77 billion.
Why Do Investors Doubt General Mills’ Cash?
The stock price appears to assume a business that keeps shrinking, and General Mills has shrunk for three years. Revenue has fallen in each of the last three years, measured over the twelve months ended each August. That fall widened to 4.5% in the twelve months ended August 2026, from 3.3% a year earlier. Its operating margin slipped to 15.2% from 18.1% two years earlier.
On its September 23, 2026 call, management said that consumers, especially middle- and lower-income ones, remain very stressed and wait to buy products on sale. To steady its volume, the company spent the last year adjusting its everyday prices. For fiscal 2027, management guides adjusted operating profit down 8% to 13% at constant currency, the same forecast it gave in July. It also expects input cost inflation at the higher end of its 4% to 5% range.
Management’s answer is $750 million of cost savings in fiscal 2027, part of $3 billion it plans by fiscal 2030. Even so, General Mills looks more like a business the market expects to shrink than one simply on sale.
What Will Show Whether General Mills’ Cash Holds Up?
General Mills has yet to show that its free cash flow has stopped falling or that its debt is getting smaller against its operating income. Management guides a free cash flow conversion rate of 95% for fiscal 2027, on its own measure. Management also expects better results from pricing and product mix starting in the second quarter, once it laps last year’s price investments.
General Mills’ free cash flow over twelve months and its net debt against operating income are the numbers to watch when it reports fiscal Q2 2027 results, expected in December 2026.
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