General Mills Stock Delivers Strong Cash Yield – Upside Ahead?

General Mills (GIS) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With GIS

GIS stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also below its 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company. Q2 FY2026 saw organic net sales decline only 1%, with improved North America Retail volumes gaining pound share in 8 of its top 10 U.S. categories. The International segment grew organic net sales by 4%. Strategic investments in product innovation are targeting a 25% sales increase from new products for FY2026. Although February guidance lowered the full-year organic sales outlook to a 1.5-2.0% decline due to weak consumer sentiment, management projects improvements from innovation and execution in the latter half of the fiscal year.

GIS Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 7.7%, but General Mills stock does
• Strong Margin: Last 12 month operating margin of 15.5%
• Growth: Last 12 months’ revenue growth of -5.7% – revenue decline, but this selection is all about high yield and margin
• Valuation: GIS stock currently trading at 38% below 2Y high, 11% below 1M high, and at a PS lower than 3Y average.

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 fell about 30% in the Dot-Com bubble and took a similar hit around 31% during the Global Financial Crisis. The 2018 correction was even harsher, with a dip close to 38%. Covid’s impact was milder but still knocked the stock down by 21%. The recent inflation shock dragged it down around 31%. Solid fundamentals don’t make you immune—GIS has seen some significant drawdowns when the broader market sells off hard.

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. Elevance Health (ELV)
2. Constellation Brands (STZ)
3. First Solar (FSLR)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few years average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

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

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

The Best Investors Think In Portfolios

Single stocks swing wildly, but staying invested matters. A well-built portfolio helps you stay invested, captures upside, and softens the blows from individual stocks.

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? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as is evident in HQ Portfolio performance metrics.