$GIS (General Mills Inc) valuation model
When a defensive staple trades at a valuation that assumes permanent decline, you either walk away - or you start digging. GIS forced me to dig.
Below, Iโm sharing the DCF model that made me question the narrative.
๐๐ฒ๐ ๐ฎ๐๐๐๐บ๐ฝ๐๐ถ๐ผ๐ป๐:
1. Explicit 10Y growth and long-term growth in perpetuity @ 1%
2. Gradual margin expansion from 19% to 22% in year 10.
3. WACC @ 7.5%. Implied market return used in calculation is 8.2%
4. An EBITDA exit multiple of 10
5. Tax rate 17%
6. The input that drives reinvestment is the most recent Sales to Capital ratio = 0.8
๐๐ถ๐๐๐ผ๐ฟ๐ถ๐ฐ ๐๐ฟ๐ผ๐๐๐ต (๐ณ๐ผ๐ฟ ๐ฐ๐ผ๐ป๐๐ฒ๐ ๐)
General Mills has delivered low-to-mid single digit revenue growth over the long term, reflecting the mature and defensive nature of the packaged food industry. Over the past decade, organic sales growth has typically ranged around 1-3% annually, with reported growth periodically boosted by pricing actions, portfolio reshaping (e.g., pet food expansion), and acquisitions. The pandemic period temporarily accelerated top-line performance due to at-home consumption, followed by a normalization phase as volumes softened and price/mix carried results. EPS growth has generally outpaced revenue over time, supported by margin management, productivity initiatives, and share repurchases, but overall the companyโs historical profile is that of a steady, cash-generative, low-growth consumer staples compounder rather than a structural growth story.
๐๐ผ๐ป๐ฐ๐น๐๐๐ถ๐ผ๐ป: Valuation suggests that the stock is trading slightly below my intrinsic value estimate, which is 49$. No entry is justified at this point.
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Keep in mind that this is an estimate - just like any DCF model. Iโm not claiming perfection, but I do trust these calculations to guide my own investments. Hopefully, they can help inform yours as well. If you choose to share it online, please credit my page as the source.
Disclaimer: This post is for informational and educational purposes only. I donโt own shares in GIS but can buy/sell at any time after this post is published. Not financial advice. Do your own research.... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
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Wed May 20 2026 20:12:52 GMT+0000 (Coordinated Universal Time)
