Over the last six months, General Mills’s shares have sunk to $54.81, producing a disappointing 17.1% loss while the S&P 500 was flat. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Is now the time to buy General Mills, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Is General Mills Not Exciting?

Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons why there are better opportunities than GIS and a stock we'd rather own.

1. Demand Slipping as Sales Volumes Decline

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

General Mills’s average quarterly sales volumes have shrunk by 1.6% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable.

2. Core Business Falling Behind as Demand Plateaus

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.

The demand for General Mills’s products has barely risen over the last eight quarters. On average, the company’s organic sales have been flat.

3. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect General Mills’s revenue to drop by 4.3%, a decrease from This projection is underwhelming and indicates its products will face some demand challenges.

Final Judgment

General Mills isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 12.9× forward P/E (or $54.81 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d suggest looking at a dominant Aerospace business that has perfected its M&A strategy.

Stocks We Would Buy Instead of General Mills

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