General Mills Inc (GIS)

Conclusion

General Mills is a US packaged food maker whose brands include Cheerios, Nature Valley, Blue Buffalo pet food and Häagen-Dazs. At 34.88 USD on 9 November 2026, the shares give a market capitalisation of 18.65 billion USD.

The verdict is undervalued. The fair value band runs from 39.30 to 58.95 USD with a midpoint of 49.13 USD, giving a margin of safety of 40.9% at the current price. EV to EBITDA stands at 9.5 against a ten-year median of 13.1, and price to free cash flow at 12.1 against 14.4. The DCF gives 39.61 USD per share at a discount rate of 8.9%, while the fair value from historical multiples is 58.64 USD. The reverse DCF implies growth of -0.3% a year, against revenue growth of 0.3% a year over five years and free cash flow per share growth of -5.6% a year over the same period.

What holds the case up is five-year free cash flow conversion of 112.8%, a Beneish M-score of -2.99, which points to an unlikely manipulation reading, and ROIC of 8.8% against a WACC of 6.5%. What would break it is a trailing operating margin of -1.1% against a ten-year median of 16.9%, a current ratio of 0.70, and net debt to EBITDA of 3.95.

Financial health

Financial strength is red, held back mainly by a current ratio of 0.70, which is assessed as bad. The quick ratio is 0.32, net debt to EBITDA is 3.95 and interest coverage is 5.08; these are neutral, and debt to equity is 1.83. The Altman Z-score is 2.27, in the grey zone. The model was designed for manufacturers, and this company is one, so the reading applies. Insolvency risk: low, about 3.8% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green. Free cash flow conversion over five years is 112.8%, but the trailing twelve-month figure is not available. The accrual ratio is -7.1%, and stock-based compensation is 0.6% of revenue, leaving free cash flow after it at 1.43 billion USD. The share count has fallen 2.4% a year over five years, which reflects buybacks. The Piotroski score is 5 of 9, and the Beneish M-score of -2.99 is unlikely. The company beat estimates in seven of the last eight quarters, with an average surprise of 5.5%. Estimates for next year have been cut: down 1.85% over 90 days, with ten downward revisions against two upward in the last 30 days.

Profitability

Profitability is red. The gross margin is 33.6% against a ten-year median of 34.5%, but the operating margin is -1.1% against 16.9%, and the net margin is -4.9% against 12.5%. ROIC is 8.8% against a WACC of 6.5%, and the given ROIC minus WACC value of 2.3% is assessed as creating value. The five-year median ROIC is 10.3%. Return on equity is -12.0%. The DuPont split shows a net margin of -0.5%, an asset turnover of 0.61 and an equity multiplier of 4.07. Leverage here magnifies a loss rather than flattering a profit.

Growth

Growth is yellow. Revenue compound growth is -2.9% over three years, 0.3% over five and 1.1% over ten. Revenue grew in six of the ten comparable years. Free cash flow per share compound growth is -5.1% over three years, -5.6% over five and -1.1% over ten. Earnings per share growth is not available. The consensus estimate for next year's earnings growth is 2.4%.

Valuation

Valuation is green. Today's multiples sit below their ten-year medians: EV to EBITDA is 9.5 against 13.1 (premium of -27.4%), price to free cash flow is 12.1 against 14.4 (-16.0%), price to sales is 1.02 against 1.98 (-48.6%) and price to book is 2.50 against 4.30 (-41.8%). Price to earnings is not meaningful because earnings are negative; the earnings yield is -4.8%. The DCF gives 39.61 USD at a discount rate of 8.9%, with 53.7% of value in the terminal period. The reverse DCF implies -0.3% growth. The fair value band is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium, and is not a price target. The dividend yield is 7.05%, the forward yield 6.81%, and the payout on free cash flow 85.1%.

Risks

A negative operating margin means current earnings do not cover costs, and the current ratio of 0.70 means short-term obligations exceed current assets. Net debt of 3.95 times EBITDA and interest coverage of 5.08 leave less room if profits fall further. Free cash flow per share has declined over three, five and ten years, and estimates for next year are being cut. The price to earnings ratio, trailing free cash flow conversion and earnings per share growth are not available. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the segment mix cannot be assessed.