General Mills Inc (GIS.US): Better Organic Sales Help Drive 1Q Beat; FY27 Guidance Reiterated

General Mills reported 1Q EPS of $0.75, above UBS and consensus estimates of $0.72. Organic sales were roughly flat, above our forecast of -1.6% and consensus of -1.9%, with organic sales beating our forecast across all divisions. Total company gross margin contracted 87bps YoY to 33.3%, above UBS/consensus of 33.2%/33.0%, while operating margin of 14.4% also came in above expectations. The company reiterated its FY27 guidance, calling for EPS of $3.00-$3.20, organic sales of -1.5% to +0.5%, and constant-currency adjusted operating profit declines of -13% to -8%, with divestitures, acquisitions, FX and the 53rd week expected to reduce net sales by about 4%. We think the print will be viewed favorably but will not be enough to alter the narrative, with the key debate centered on when/if the top line can return to growth. UBS maintains a Sell rating with a US$33.00 12-month price target.