GIS - Embedded Expectations Analysis - 2020 10 19
General Mills, Inc. (GIS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) earnings, with a 22.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about sales growth, brand investments, and changing consumer trendsSpecifically, management may lack confidence in their ability to increase their cereal market share. Management may also be exaggerating the growth in their pet business and the improvements in their refrigerated baked goods business. In addition, they may have concerns about changing consumer trends and their ability to capitalize on extra display space. Furthermore, management may lack confidence in their ability to grow adjusted operating margins, generate returns from their brand investments, and retain customers. Moreover, they may lack confidence in their marketing and innovation abilities, the long-term potential of the Häagen-Dazs and Wanchai Ferry brands, and their ability to continue executing their freight needs at contract rates. Finally, management may be concerned about the effect of recent divestitures on the business and they may be exaggerating their customer relationships
General Mills manufactures and markets branded consumer foods. The company's segments are: North America Retail, which provides cereals, refrigerated yogurt, soup, meal kits, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and organic products, among others; Convenience Stores and Foodservice, which provides snacks, yogurt, frozen meals and frozen dough products, and baking mixes, among others; Europe and Australia, which includes retail and foodservice businesses in the Europe and Australia region; Asia and Latin America, which consists of retail and foodservice businesses in the Asia and South America regions; and Pets, which includes pet food products.
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