General Mills 2026 Q2 Earnings Beats Expectations as Net Income Dives 48.4%

General Mills (GIS) reported Q2 2026 earnings that exceeded expectations, with revenue and EPS both surpassing forecasts. The company reaffirmed its fiscal 2026 guidance despite a 7.2% revenue decline and a 48.4% drop in net income.

Revenue

General Mills’ total revenue fell 7.2% to $4.86 billion in Q2 2026, driven by a 6-point headwind from divestitures. North America Retail, its largest segment, saw a 13% revenue decline to $2.88 billion, while North America Pet grew 11% to $660 million. International sales rose 5.6% to $728.9 million, and North America Foodservice declined 7.7% to $581.8 million. Organic net sales dipped 1%, reflecting flat volumes offset by a 2% price/mix decline.

Earnings/Net Income

The company’s EPS plummeted 45.5% to $0.78, while net income fell 48.4% to $414.30 million. Adjusted EPS of $1.10, though down 21%, outperformed estimates. The significant decline in profitability underscores margin pressures from remarkability investments and higher costs, despite sequential volume improvements in key segments.

Price Action

The stock edged up 1.27% in the latest trading day, gaining 6.34% week-to-date and 2.53% month-to-date.

Post-Earnings Price Action Review

The strategy of buying GIS when revenues beat and holding for 30 days underperformed significantly, returning -44.02% versus the benchmark’s 80.61%. While the maximum drawdown was 0.00%, the Sharpe ratio of -0.79 and CAGR of -17.77% highlight poor risk-adjusted returns.

CEO Commentary

CEO Jeff Harmening emphasized progress in North America Retail’s volume growth and North America Pet’s recovery, driven by brand investments. Challenges include yogurt divestitures and trade expense timing, with strategic priorities focused on operational efficiency and innovation.

Guidance

General Mills reaffirmed fiscal 2026 guidance: organic net sales growth of -1% to +1%, adjusted operating profit and EPS declines of 10%-15% in constant currency, and free cash flow conversion of at least 95% of adjusted after-tax earnings.

Additional News

Stifel maintained a Buy rating on GIS, citing an undervalued P/E ratio of 8.9 and a 5.2% dividend yield, while Jefferies kept a Hold rating. The company plans to launch new products like Cheerios granola and Ghost protein bars to drive innovation-led sales growth.