General Mills Earnings: Organic Net Sales Growth Improvement, but Shares Now Fairly Valued

Narrow-moat General Mills reported fiscal first-quarter organic sales declined 1%, a significant improvement compared with the 6% decline in the preceding quarter. Management maintained full fiscal year guidance for organic net sales growth of flat to 1%, adjusted operating profit of down 2% to flat, and adjusted diluted EPS growth of down 1% to up 1%. We don’t expect to materially change our preprint forecasts of 0.5%, negative 3%, and negative 1.5%, respectively. Our expectations for input cost inflation to offset cost savings and increased median spending amid nascent top-line recovery drove our slight conservativism for profitability. As such, we expect to maintain our $74 fair value estimate.