Shares of General Mills (GIS) fell in pre-market trading after the company cut its FY25 forecast, despite reporting strong fiscal Q2 results. The manufacturer and marketer of branded ultra-processed consumer foods posted adjusted earnings of $1.40 per share, reflecting a 12% year-over-year increase on a constant currency basis. This beat consensus estimates of $1.22 per share.
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Additionally, the company’s revenues grew 2% year-over-year to $5.2 billion in the second quarter, exceeding Street estimates of $5.14 billion.
GIS Lowers FY25 Profit Forecast
Looking ahead, General Mills expects its organic net sales to remain flat or increase by up to 1% year-over-year. However, adjusted diluted earnings are now projected to decline by 3% to 1% per share on a constant currency basis. This marks a downward revision from the previous forecast, which anticipated a range of a 1% decline to a 1% increase.
The company revised its profit outlook due to its strategy of cutting prices across product lines, including snacks and pet food, to boost sales volumes. While these price reductions aim to drive demand, the associated rise in promotional spending is weighing on profitability.
Is GIS Stock a Good Buy?
Analysts remain cautiously optimistic about GIS stock, with a Moderate Buy consensus rating based on four Buys and 11 Holds. Year-to-date, GIS has inched by more than 2%, and the average GIS price target of $74 implies an upside potential of 12.2% from current levels. These analyst ratings are likely to change following GIS’s results today.
