GIS
General Mills, Inc.
$38.70
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 37.9% below fair value
You pay
$38.70
Bear
$51.36
Fair
$62.36
Bull
$73.37
Bear
$51.36
+32.7%
$4.31 × 14x P/E
Fair
$62.36
+61.1%
$4.31 × 17x P/E
Bull
$73.37
+89.6%
$4.31 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
9.0x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $36.92 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $62.36 per share.
Warnings
Dividend-based valuation: $54.15 (below our primary estimate by 26%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $36.92 (from 36 analysts). Our estimate is 98% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples