General Mills Stock Is Down 30%, and Wall Street Analysts Keep Cutting Their Price Targets. Here's Why History Says They're Missing the Bigger Picture.

Shares of General Mills are down about 30% over the past year, outperforming only by a slim margin compared to the consumer staples sector, which has gained around 10% during the same period. Analysts are pessimistic about General Mills' prospects, with only three of them recommending the stock as a buy. However, history suggests the company could rebound.

The food giant has faced similar challenges like changing consumer habits, inflation, and rising costs. While the first-quarter 2027 results showed a 3% sales decline and flat organic growth, that's better than the 5% sales drop and 2% organic sales decline in 2026. The company's international and food service divisions showed growth during the quarter.

Despite the difficulties, General Mills remains an established brand with a long history. The real question for investors is how it navigates these challenges. In fiscal 2026, General Mills reduced its prices in response to pricing being out of line with consumer spending levels. The company has also been working on cost reduction and modernizing its brands.

The fiscal first-quarter 2027 earnings were stronger than expected, with an adjusted earnings per share of $0.75, resulting in an 80% payout ratio. While this is high, it's similar to what the company has done during tough periods before resuming dividend increases. The dividend is currently steady, but investors should be cautious.

However, with a yield of 7.3%, the stock offers a significant income return for long-term holders. Even if the payout ratio appears high, there is room before a dividend cut becomes necessary. The upcoming change in CEO, who has 27 years of experience with the company, suggests continuity in the company's dividend policy. Overall, despite the current struggles, General Mills appears to be a resilient company that could be worth holding for the long term.