General Mills Earnings: Signs of Stabilization as Volume Declines Ease; Shares Still Undervalued

Narrow-moat General Mills reported fiscal third-quarter organic sales declined 1%, reflecting a potential positive turning point in the consumer environment. Profitability remained healthy, too, with adjusted operating margins up 220 basis points over the prior-year quarter to 17.9%. Management maintained fiscal 2024 guidance for organic sales growth of flat to down 1%, as well as 4%-5% growth for both adjusted operating profit and adjusted EPS. We expect to increase our $77 fair value estimate by a low-single-digit percentage, mostly due to the time value of money.