General Mills Inc. (GIS): Rising input costs offset better top line trends for a consistent FY27 outlook

GS maintains a Neutral rating on General Mills (GIS) with a 12-month price target of $35. GIS closed up +1.0% (vs S&P -0.8% and XLP -0.4%) after F1Q results and reiterated FY27 guidance. The better-than-expected top line in the quarter is encouraging, although there are still some brands/categories the company needs to address to support the 2H inflection embedded within the guide, plus input cost pressure is reaccelerating, which is limiting flow-through. That, combined with the company's elevated leverage and dividend payout ratio, likely limits upside in the shares in the near-term. In F1Q, organic net sales for NA Retail declined -3%, driven by lower volumes (-2%) and unfavorable price/mix (-1%), while Pet organic sales tracked flat (price/mix +7%, volumes -6%). GIS reiterated its FY27 guidance, including adj EPS of $3.00-$3.20, organic net sales of -1.5% to +0.5%, and an adj operating income decline of -13% to -8% (constant currency), but raised its outlook for input cost inflatio