Our $56 target price is derived using a 50/50 weighting on P/E and EV/EBITDA. For P/E, we use a 13.5x multiple atop our CY26 EPS estimate. For EV/EBITDA, we use a 11.5x multiple atop our calendar 2026 EBITDA estimate. This is a ~3x discount to GIS's five-year average on P/E and ~2x on EV/EBITDA - most lower-growth large cap food peers currently trade at slightly larger discounts.

GIS’s upside risks to our target price include: 1) Pet trends could rebound; 2) Inflation could be lower than GIS has guided to; and 3) Margin expansion in GIS’s International and Foodservice could be better than expected.

GIS’s downside risks include: 1) Increased promotional activity could weigh on earnings; 2) Pet sales might erode further; and 3) M&A might not be well received.