General Mills, Inc. GIS reported fourth-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.

The company posted adjusted earnings of 95 cents per share, which beat the Zacks Consensus Estimate of 82 cents. The bottom line also increased 27% year over year on a constant-currency (cc) basis, driven by elevated adjusted operating profit, a reduced adjusted effective tax rate and fewer shares outstanding, partially offset by higher net interest expense.

General Mills, Inc. Price, Consensus and EPS Surprise

General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote

Net sales increased 1% to $4,609.6 million, benefiting from a 7-point contribution from the 53rd week and a 1-point benefit from foreign currency exchange, partially offset by a 7-point headwind from the net impact of divestitures and acquisitions. On an organic basis, sales were broadly unchanged, including a 1-point benefit from favorable trade expense timing. The top line also beat the Zacks Consensus Estimate of $4,604 million.

GIS’ Quarterly Margin Performance

The adjusted gross margin increased 150 basis points (bps), reaching 34.2% of net sales, supported by favorable pricing and mix, with higher input costs partially offsetting these gains. Favorable trade expense timing contributed a 60 bps benefit to adjusted gross margin. We expected an adjusted gross margin expansion of 50 bps.

General Mills’ adjusted operating profit increased 13% in constant currency to $705 million, driven by elevated adjusted gross profit dollars, including a 7-point benefit from favorable trade expense timing. Adjusted operating margin improved 160 bps to 15.3%. We expected an adjusted operating margin of 14.3% for the quarter.

Decoding GIS’ Segmental Performance

North America Retail: Revenues in the segment were $2,466.6 million, down 4% year over year, including a 10-point headwind from the divestiture and a 7-point benefit from the 53rd week. Organic net sales were essentially unchanged from the prior year, while Nielsen-measured retail sales declined 4%. The difference was primarily cused by a previously anticipated 2-point benefit from trade expense timing and favorable changes in retailer inventory levels.

Segment operating profit of $506.4 million increased 7% for both reported and in constant currency. Growth was driven by favorable net price realization and product mix, along with lower selling, general and administrative (SG&A) expenses. These benefits were partially offset by lower volumes, including the impact of the U.S. yogurt divestiture, and higher input costs. Favorable trade expense timing contributed approximately 9 percentage points to quarterly operating profit growth.

North America Pet: Revenues rose 4% year over year to $702.4 million, benefiting by 7-points from the 53rd week. Sales grew at a double-digit rate in cat food, increased at a low-single-digit rate in dog food and declined slightly in pet treats. Organic net sales declined 3%, while all-channel retail sales fell approximately 1%. The difference was largely attributable to changes in retailer inventory levels.

Segment operating profit increased 14% to $160 million on both a reported and constant-currency basis. The improvement was driven primarily by favorable net price realization and mix, as well as lower input costs, partially offset by elevated SG&A expenses, including a double-digit increase in media investments.

North America Foodservice: Revenues were $574.6 million, which decreased 1%, including a 7-point headwind from the U.S. yogurt divestiture and a 6-point benefit from the 53rd week. Organic net sales were essentially flat, including a 2-point headwind from index pricing on bakery flour.

Segment operating profit gained 22% to $101.3 million, primarily due to Holistic Margin Management cost savings and favorable net price realization and mix, partially offset by input cost inflation.

International: Revenues in the segment were $858.4 million, up 16% year over year, benefiting from an 8-point contribution from the 53rd week and a 5-point benefit from foreign currency exchange. Organic net sales grew 3%, driven by strong performance in Brazil, Europe, India and China.

Segment operating profit increased to $61 million from $33.7 million a year ago, driven by favorable net price realization and mix, along with higher volumes, partially offset by higher input costs and increased SG&A expenses.

GIS’ Financial Health Snapshot & Other Developments

General Mills ended the quarter with cash and cash equivalents of $453.8 million, long-term debt of $12,416 million and total stockholders’ equity (excluding noncontrolling interests) of $7,368.4 million.

The company generated $2,166.2 million in cash from operating activities in fiscal 2026. Capital investments amounted to $539.9 million during the same period. The company paid out dividends worth $1,315 million and bought shares for $500 million in the aforementioned period.

GIS declared a quarterly dividend of 61 cents per share, payable on Aug. 3, 2026, to its shareholders of record as of July 10.

What to Expect From GIS in Fiscal 2027?

General Mills expects consumer demand to remain challenging in fiscal 2027 and plans to drive growth through product innovation focused on health, flavor, indulgence and pet humanization trends. The company aims to support profitability with at least $750 million in cost savings, although earnings will face headwinds from the absence of the prior year's 53rd week, higher incentive expenses and the impact of recent divestitures.

The company has provided its full-year fiscal 2027 outlook. Organic net sales are projected to range from a decline of 1.5% to growth of 0.5%. On a constant-currency basis, adjusted operating profit is expected to be down 8% to 13% from the fiscal 2026 base of $2.8 billion. Adjusted earnings per share are expected to be between $3.00 and $3.20, with an immaterial impact from foreign currency exchange. The company also expects free cash flow conversion to be approximately 95% of adjusted after-tax earnings.

This Zacks Rank #4 (Sell) company’s shares have lost 7% in the past three months against the industry’s growth of 3.6%.

Stocks to Consider

Darling Ingredients Inc. DAR develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Darling Ingredients’ current fiscal-year sales and earnings indicates growth of 12.3% and 575.6%, respectively, from the prior-year reported levels. Darling Ingredients delivered a trailing four-quarter earnings surprise of 14.8%, on average.

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural carries a Zacks Rank of 2 (Buy). UNFI delivered a trailing four-quarter earnings surprise of 29.9%, on average.

The consensus estimate for United Natural’s current fiscal-year earnings implies growth of 254.9% from the year-ago figures.

Mama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2. Mama's Creations delivered a trailing four-quarter earnings surprise of 129.2%, on average.

The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30% and 73.3%, respectively, from the year-ago figures.

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