GIS - Embedded Expectations Analysis - 2021 02 23
General Mills, Inc. (GIS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) earnings, with a 20.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their capital allocation strategy, e-commerce growth, and Blue BuffaloSpecifically, management may lack confidence in their ability to further innovate their pipeline, execute their capital allocation strategy, and recover normal inventory levels by Q4 2021. Furthermore, they may have concerns about potential consumer shifts to private labels, the mass channel roll-out of their Blue Buffalo business, and the sustainability of growth in their e-commerce business, particularly in Korea and Europe. Finally, management may be overstating the strength of margins in their meal and baking businesses, the potential of their promotional activity, and the opportunities to enhance their pet specialty stores brand
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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