GIS

Quick Report on General Mills (GIS)

General Mills shares fell by -1.2% during the day's afternoon session, and are now trading at a price of $62.65. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

A Very Low P/E Ratio but Trades Above Its Graham Number:

General Mills, Inc. manufactures and markets branded consumer foods worldwide. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, General Mills has a trailing 12 month P/E ratio of 15.3 and a P/B ratio of 3.55.

General Mills's PEG ratio is 1.85, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (MM) $15,740 $16,865 $17,627 $18,127 $18,993 $20,094
Gross Margins 34% 34% 35% 36% 34% 33%
Operating Margins 15% 15% 17% 17% 18% 17%
Net Margins 14% 11% 13% 13% 14% 13%
Net Income (MM) $2,163 $1,786 $2,211 $2,346 $2,735 $2,610
Net Interest Expense (MM) $374 $522 $466 $420 $380 $382
Depreciation & Amort. (MM) $619 $620 $595 $601 $570 $547
Earnings Per Share $3.64 $2.9 $3.56 $3.78 $4.42 $4.3100000000000005
Diluted Shares (MM) 586 605 613 619 613 601
Free Cash Flow (MM) $2,218 $2,269 $3,215 $2,452 $2,747 $2,089
Capital Expenditures (MM) $623 $538 $461 $531 $569 $690
Net Current Assets (MM) -$18,623 -$17,408 -$16,459 -$15,503 -$15,617 -$15,697
Long Term Debt (MM) $12,669 $11,625 $10,929 $9,787 $9,135 $10,524
Net Debt / EBITDA 4.87 4.4 3.04 3.29 2.8 2.96

General Mills has growing revenues and a flat capital expenditure trend and wider gross margins than its peer group. Additionally, the company's financial statements display decent operating margins with a stable trend and positive EPS growth. However, the firm has a highly leveraged balance sheet. Finally, we note that General Mills has irregular cash flows.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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