General Mills Shares Slump as Quarterly Performance Disappoints

General Mills Q3 revenue fell 8%, EPS missed estimates by 12%. Analysts lowered price targets as buybacks slowed and operating profit plunged 41%.

For the first time since the second quarter of 2021, General Mills has fallen short of market expectations. The food giant's third-quarter results for fiscal 2026 revealed a company grappling with declining sales volumes, rising costs, and a scaled-back share repurchase initiative, prompting a swift and negative reaction from Wall Street.

Analyst Targets Lowered Following Earnings Miss

The company reported a quarterly revenue decline of 8% to $4.44 billion, with organic sales down 3%. A particularly sharp drop was seen in operating profit, which plunged 41% to $525 million. Consequently, the operating margin contracted by 660 basis points to 11.8%. Adjusted earnings per share came in at $0.64, missing the consensus estimate of $0.73 by approximately 12%.

Management attributed the weak performance to a combination of higher input costs, lower volume contributions, increased restructuring charges, and the absence of a prior-year gain on divestiture that had bolstered previous results.

In response, equity researchers moved to cut their price targets across the board:

• Barclays reduced its target to $41 from $43, maintaining an "Equalweight" rating.
• TD Cowen slashed its target to $37 from $45, citing ongoing pressure expected to persist into fiscal 2027.
• Stifel lowered its target to $44 from $50, highlighting the quarter's 37% decline in EPS.
• RBC Capital adjusted its target down to $55 from $60, though it kept its "Outperform" rating in place.

The current analyst consensus sits at a "Hold" rating, based on the views of 15 covering firms.

Share Buyback Pace Slows

Capital returns to shareholders also showed strain. During the first nine months of the fiscal year, General Mills repurchased $500 million of its own stock, a significant reduction from the $902 million bought back in the same period a year earlier. Combined with dividend payments of $987 million, total shareholder returns amounted to $1.49 billion. This slower buyback pace, occurring alongside falling profits, diminishes a key lever the company has traditionally used to support its earnings per share.

Management Holds Guidance, Pins Hopes on Q4

Performance in the core North America Retail segment was weak, with sales dropping to $2.6 billion. This was driven by the divestiture of its yogurt business and soft demand for cereal, snacks, and baking products. A rare bright spot was the international business, where organic sales grew 1%, fueled by double-digit growth for snack bars in France.

In mid-March, the company also announced an agreement to sell its Brazil operations to Café Três Corações. The transaction is slated for completion by the end of calendar year 2026; however, General Mills anticipates recording a pre-tax loss on the deal, which includes accumulated currency translation losses of $622 million.

Despite the quarter's challenges, CEO Jeff Harmening reaffirmed the company's full-year fiscal 2026 outlook. He pointed to an expected significant improvement in the fourth quarter. CFO Kofi Bruce clarified that this anticipated rebound would be largely mechanical, stemming from the inclusion of a 53rd week in the fiscal calendar, the reduction of trade inventory headwinds, and easier year-over-year comparisons for trade spending. This admission suggests a fundamental operational recovery is not necessarily required for the projected improvement, raising questions about its sustainability.

General Mills stock is currently trading near its 52-week low, approximately 22% below its 200-day moving average.