03:56 PM EDT, 03/17/2026 (MT Newswires) -- General Mills ( GIS ) is expected to see "minor headwinds" in fiscal 2026 from the ongoing conflict in the Middle East given its hedging practices and other factors, RBC Capital Markets in a note e-mailed Tuesday.

Last month, the parent of the Cheerios and Betty Crocker brands cut its full-year outlook, citing "a more challenging backdrop." The revised guidance called for organic net sales to be down 1.5% to 2% and adjusted operating profit and adjusted per-share earnings to be down 16% to 20% in constant currency.

The outlook took into account "weak consumer sentiment, heightened uncertainty, and significant volatility (that) have weighed on category growth and impacted consumer purchase patterns," the company said Feb. 17. Those factors resulted in "a slower pace and higher cost of volume recovery" than initially estimated, it said. The US-Israel war with Iran started at the end of February.

"While (the) duration of the (Middle East) conflict will determine the level of impact, we believe that (General Mills ( GIS )) should only see minor headwinds in (fiscal 2026) from the conflict given hedging practices, inventory on hand, timing lags, and only one quarter remaining in the year," Nik Modi, co-head of global consumer and retail research at RBC, said in a note to clients.

The Iran war has sent energy prices soaring amid the closure of the crucial Strait of Hormuz, igniting inflation concerns.

RBC expects General Mills ( GIS ) to reiterate its annual outlook when it reports its fiscal third-quarter results Wednesday, saying that recent remarks from J.M. Smucker (SJM) and Campbell's (CPB) also point to the difficult operating environment noted by General Mills ( GIS ). The brokerage expects General Mills' ( GIS ) full-year EPS of $3.45 on net sales of $18.05 billion. Wall Street is looking for $3.47 and $18.39 billion, respectively, according to the note.

RBC projects the company's third-quarter EPS at $0.75, which it said would match the consensus. The brokerage pegs net sales at $4.39 billion, while the Street is looking for $4.42 billion, RBC said.

"We believe current consensus expectations sufficiently incorporate the headwind for (the third quarter) given (management's recent) commentary," Modi said. "Given that (General Mills ( GIS )) expects 2027 to be a better year, any commentary on the impact from Operation Epic Fury to the forward year will be important."

RBC has an outperform rating on the General Mills ( GIS ) stock, with a $60 price target.

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