Considering an Investment in General Mills (GIS)? Read This!

By Naomi Wentworth • Wednesday, November 13 15:11 • Permanent Link

It's been a great afternoon session for General Mills investors, who saw their shares rise 1.3% to a price of $65.1 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

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 23.09 and an average price to book (P/B) ratio of 3.3. In contrast, General Mills has a trailing 12 month P/E ratio of 15.5 and a P/B ratio of 3.9.

General Mills's PEG ratio is 4.23, 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.

Stagnant Revenue Growth but Not Enough Current Assets to Cover Current Liabilities:

	2018	2019	2020	2021	2022	2023
Revenue (M)	$16,865	$17,627	$18,127	$18,993	$20,094	$19,857
Gross Margins	15%	17%	17%	18%	17%	17%
Net Margins	10%	12%	13%	14%	13%	13%
Net Income (M)	$1,753	$2,181	$2,340	$2,707	$2,594	$2,497
Net Interest Expense (M)	$522	$466	$420	$380	$382	$479
Depreciation & Amort. (M)	$620	$595	$601	$570	$547	$553
Diluted Shares (M)	612	620	613	602	583	564
Earnings Per Share	$2.9	$3.56	$3.78	$4.42	$4.31	$4.31
EPS Growth	n/a	22.76%	6.18%	16.93%	-2.49%	0.0%
Avg. Price	$38.86	$44.69	$53.68	$56.93	$66.24	$64.98
P/E Ratio	13.31	12.45	14.09	12.76	15.19	14.97
Free Cash Flow (M)	$2,269	$3,215	$2,452	$2,747	$2,089	$2,528
CAPEX (M)	$538	$461	$531	$569	$690	$774
EV / EBITDA	10.99	10.03	11.04	10.91	12.66	12.26
Total Debt (M)	$11,625	$10,929	$9,787	$10,809	$12,240	$13,045
Net Debt / EBITDA	3.53	2.35	2.34	2.51	2.93	3.16
Current Ratio	0.61	0.76	0.85	0.58	0.64	0.66

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.