In May, I bought General Mills $GIS ( ▼ 3.86% ) stock because I believe the company is undervalued and will provide me with a great cash return.

I bought ~8.7 shares for $292.

I paid $33.55 for each share.

According to my estimate, the stock is worth ~$44.

The company pays a dividend of $2.44, which gives me a cash return of 7.27%.

General Mills started 160 years ago, and they own some of the most iconic brands in the food industry.

They have more than 100 brands and operate in over 100 countries.

Their revenue is $18.43 billion and 80% of their sales are in the U.S.

Their business is organized around 4 segments:

The stock has declined 58% from its all-time high of ~$90 in May 2023.

Consumer Squeezed: Consumers are battling against high inflation which reduces their purchasing power. Forced to watch their spending, consumers are buying fewer products, and when they do buy, it’s when General Mills’ products are on sale. This behavior reduces the company’s revenue and margins.

Weight Loss Drugs: GLP-1 drugs make people eat less which lowers demand for General Mills’ products.

Products were too expensive: Since the pandemic, many restaurants and food companies aggressively raised their prices, which eventually caused people to spend less at restaurants and on General Mills products. Companies are now lowering their prices to win over cash strapped consumers.

Brand

Although some of General Mills’ brands are struggling, they still have a strong showing in the grocery aisle. They have the #1:

I believe their brands are strong enough to keep consumers’ attention long enough until they execute the right strategy.

Strategy

General Mills’ long-term business goals are to:

To reach their goals, General Mills plans to:

Management

Jeff Harmening has been with General Mills for 32 years. He became CEO in 2017. In 2026, Food Industry Executive ranked him as the 10th best CEO in the food and beverage industry.

11 of the 13 executives mentioned in General Mills 10-K have been with the company an average of 19 years, which can be good and bad.

Good: The leadership team has extensive experience in the food industry.

Bad: Their long tenure as a group might cause them to operate in a bubble.

Board of Directors

4 of the 13 board members have experience in the food industry. 2 of the 4 members are General Mills’ CEO and COO. Most members of the board have experience in consumer packaged goods and retail, but not food.

Since most of the executives grew up in General Mills’ ecosystem, they might focus on doing things the “General Mills way”.

The company should get more independent board members who know the food industry and can push back on management’s strategy if necessary.

Capital Allocation

The company is spending less on share buybacks, so they can pay down their debt.

I’m happy to see them reduce their buybacks because their attempts have not been successful.

Today, the stock is at $37.

Paying my dividends, reducing debt, and investing in their products is the better strategy going forward. Not buying back stock to prop up falling shares.

Debt Level

The company has $13.75 billion of debt and $492 million in cash.

Something is seriously strange with American companies. It seems they loathe having cash on their balance sheet. I hear people complain about private equity investors loading companies with debt, so they can juice their returns, while hampering the company in the process.

I think equal attention needs to be placed on executives who load companies with debt, so they can pursue short term returns.

General Mills must retire $1.053 billion of debt this fiscal year, so they must manage their cash wisely. Especially since they expect consumers to be financially strapped in the near future, which can lead to lower revenue and margins for the company.

Better to reduce their debt just in case cash flow declines.

The company’s goal is to reduce their Net Debt to EBITDA from ~3.85x to 3x.

Valuation

Based on my valuation model, General Mills is worth ~$44.

I bought my shares at $33.55, a 24% discount.

I plan to buy more shares if the stock falls to ~$30.80.

The company’s revenue fell 5.4% in 2026 vs 2025.

Most of the decline is from lower sales, and the sale of their Yogurt Business.

Their sales will decline more when they sell their Brazilian business, which they wrote down its value by $1.032 billion. They are also selling their Haagen-Dazs business in China.

Free Cash Flow

The company’s free cash flow was $1.62 billion in 2026.

Right now, their free cash flow covers the dividend 1.2x, which is tight.

Their free cash flow can increase if they successfully cut costs by $3 billion and manage their working capital efficiently.

Dividend

General Mills has paid a dividend for 127 straight years. The dividend seems important to the company, so there’s a good chance they will try to preserve it.

The dividend yield is currently 6.5%. Many investors will stay away because the company is in negative to slow growth mode and they fear the dividend will be cut.

When running my numbers, I assume the dividend will be cut by 50%. If it’s cut, my income return will be 3.64% instead of 7.27%. Still higher than the 3% yield on my savings account.

General Mills needs to string together a few good quarters of 1-3% organic sales growth. If they do, investors will become enthusiastic about the stock and pile into it.

If the company stabilizes, investors will be comfortable buying the stock at a 3.5% - 4.5% dividend yield. General Mills’ average dividend yield over the last 7 years was 3.35%.

Revenue doesn’t need to grow much, just 1-3%. Then people will start calling General Mills, “Generous Mills” again, and view the company as a reliable, safe, dividend payer. In this scenario, I can 2x my money without the dividends.

I think this is a good investment because I’m buying one of the top food companies in the world at a bargain price. I have no problem holding General Mills until it regains its footing. Individual investors have an advantage over professional investors because we can wait a long time for situations to turn around.

General Mills might be a situation where I just need to sit, wait, and collect my dividends like Rockefeller.

Remember to pray for the Bronx and its success.

“By the blessing of the upright a city is exalted, but by the mouth of the wicked it is overthrown.”
Proverbs 11:11 ESV

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