General Mills Faces Analyst Downgrades After Quarterly Earnings Miss

General Mills shares fall after Q3 FY2026 results miss estimates, prompting analyst downgrades. Company sells Brazil ops and focuses on core brands amid strategic shift.

Shares of food manufacturer General Mills are under pressure following the release of disappointing third-quarter results for its 2026 fiscal year. The company's earnings per share fell sharply, missing Wall Street's forecasts and triggering a series of price target reductions from key financial institutions.

Earnings Shortfall and Strategic Shifts

For the quarter ending February 22, 2026, General Mills reported a decline in revenue to $4.44 billion, representing an 8% drop. On an organic basis, which adjusts for acquisitions and divestitures, sales decreased by 3%. A significant factor in the earnings miss was the divestiture of its North American yogurt business. This move, combined with increased tax expenses and lower operating profit, drove adjusted earnings per share down to $0.64, well below the consensus estimate of $0.73.

In a concurrent strategic update, the company confirmed the pending sale of its Brazil operations, including the Yoki and Kitano brands, to Café Três Corações S.A. The transaction carries a base price of 800 million Brazilian Real and is expected to close by the end of calendar year 2026. This sale aligns with management's stated goal of focusing on higher-margin global core brands.

Wall Street Reacts with Caution

The financial community responded to the report with a wave of target price cuts. Analysts at UBS reduced their price objective from $40 to $35, maintaining a Sell rating. They cited a challenging operating environment as a primary concern. JP Morgan analysts also lowered their target, moving from $42 to $36 and reiterating an Underweight recommendation. They highlighted a 32% decline in constant-currency adjusted operating profit.

A slightly more constructive view came from RBC Capital Markets. While the firm reduced its target from $60 to $55 per share, it maintained an Outperform rating. RBC pointed to the stock's dividend yield of 6.5% and noted that General Mills holds stable or growing market share in eight of its ten core North American categories.

Management's Path Forward and Outlook

CEO Jeff Harmening stated the company is approaching an inflection point. He pointed to the "Remarkability" strategy, which emphasizes price competitiveness and brand renovation, as the key to stabilizing volume trends. New product innovations already account for approximately 25% of the company's North American retail sales.

A multi-year supply chain restructuring initiative is underway, with total costs projected to reach about $96 million by 2029. Looking ahead to the fourth quarter, management anticipates that a reversal of inventory reductions at a major retail customer could boost organic growth by roughly 200 basis points. Despite the weak quarterly performance, General Mills reaffirmed its full-year fiscal 2026 guidance.

The stock is currently trading near its 52-week low, reflecting investor skepticism over whether the company can return to genuine volume growth in 2027 without resorting to further price concessions.