Is the Market Overlooking General Mills Stock’s Next Move?

We think General Mills (GIS) stock could be a good value buy. It is currently trading lower than average valuation, and has strong margins to go with its modest valuation.

Buying stocks with low valuations or trading well below their peaks but maintaining strong margins allows investors to capture mean reversion and valuation re-rating potential. The downside risk is potentially less because high-margin businesses can sustain earnings and recover faster when sentiment or market conditions improve

What Is Happening With GIS

GIS may be down -5.2% so far this year but is now 30% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago, and also trades at a P/E (Price-to-Earnings) ratio that is below S&P 500 median.

The stock may not reflect it yet, but here is what’s going well for the company: General Mills is prioritizing cost efficiencies via its Holistic Margin Management program and strategic pricing on two-thirds of its portfolio. Recent Q2 FY26 data shows volume gains in 8 of 10 North America Retail categories and strong pet food momentum, driven by successful launches like Blue Buffalo ‘Love Made Fresh’. While overall organic net sales were down in Q1 and Q2 FY26 due to investments and mix, a 25% increase in new product innovation aims to restore volume growth. The current valuation is discounted amid short-term profit headwinds from investments and broader market concerns about consumer staples growth, despite reaffirming FY26 guidance for flat to 1% organic net sales.

GIS Has Strong Margin Play

• Revenue Growth: -5.7% LTM and -0.9% last 3 year average. Not ideal, but this is a margin and value play.
• Strong Margin: Nearly 17.1% 3-year average operating margin.
• No Major Margin Shock: General Mills has avoided any large large margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, GIS stock trades at a PE multiple of 9.2

Below is a quick comparison of GIS fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While GIS stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. GIS has seen some serious dips in past crises. It dropped about 30% in the Dot-Com Bubble and nearly 32% during the Global Financial Crisis. The 2018 correction hit even harder, with a roughly 38% slide. Covid wasn’t kind either, pushing it down around 21%. The Inflation Shock brought another 31% pullback. The stock looks solid overall, but these drops show that even steady names get caught up when the market turns south.

For more details and our view, see Buy or Sell GIS Stock.

Stocks Like GIS

Not ready to act on GIS? Consider these alternatives:

1. PayPal (PYPL)
2. ONEOK (OKE)
3. Lululemon Athletica (LULU)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Meaningfully below 1Y high
3. Current P/S < last few year average
4. Strong operating margin
5. P/E ratio below S&P 500 median

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
• Strategy consistent across market cycles

Portfolios Over Individual Stock Picks

Stocks soar and sink – the key is staying invested. A balanced portfolio keeps you in the market, boosts gains and reduces single stock risk

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.