GIS Stock: General Mills Yields 6.6% After a 30% Drop — Value Buy or Value Trap?

General Mills (GIS) Q4 FY2026 — FY2026 net sales fell 5% (organic -2%) and adjusted EPS dropped 16% to $3.55 amid soft volumes, private label, and GLP-1 fears — and the stock has slid ~30% to ~$37, pushing the yield to ~6.6%. General Mills (Cheerios, Blue Buffalo, Betty Crocker) has been cut down to ~$37 (~10x earnings, ~6.6% covered yield) on real packaged-food headwinds. But the market is pricing perpetual ~3%/yr decline — and even a slowly declining GIS models above the price, with a growing pet business as a wildcard. THE CALL: BUY (3/5, VALUE & INCOME) — base-case value ~$45 vs ~$37 today. KEY METRICS: - Q4: net sales +1% to $4.6B (organic flat), adj EPS $0.95 (+27% cc — flattered by a 53rd week) - FY2026: net sales -5% to $18.4B (organic -2%); adjusted EPS $3.55 (-16% cc) - FY2027 plan: $3B cumulative cost savings by FY2030 ($750M in FY27) + innovation/renovation for the top line - Valuation ~$37, ~10x forward P/E; dividend ~$2.44/yr = ~6.6% yield, ~69% payout (covered) - Free cash flow ~$2.4B/yr; Blue Buffalo pet food is the key growth engine - Owner-earnings DCF (base ~$2.0B, -1%/+2%, 8-10%): ~$45 fair value; even the -1% decline case ≈ $43 (> price) - The market at ~10x is implicitly pricing a perpetual ~3%/yr decline - Key risk: GLP-1 weight-loss drugs + private label accelerating the secular volume decline What to watch: organic sales / volume trends (the secular gauge), the $3B cost-savings program + Blue Buffalo pet growth, and the dividend's coverage Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.