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General Mills (GIS) is drawing fresh attention as investors consider its current share price of $48.58 in light of its recent performance, including a one-month return of 9.7% and a three-month gain of 2.5%.
See our latest analysis for General Mills.
While the recent 30 day share price return of 9.7% suggests improving momentum at the current share price of $48.58, longer term total shareholder returns, such as the 1 year decline of 14.3% and marginal 5 year gain of 0.05%, point to a more muted overall journey and hint that investors are reassessing both growth potential and risk.
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With an intrinsic value estimate suggesting a sizable discount and a modest gap to the average analyst target of $52.42, is General Mills quietly undervalued today, or is the market already accounting for its future growth?
On a simple headline measure, General Mills looks inexpensive, with a P/E of 10.3x at a last close price of $48.58 and several checks flagging the shares as good value compared with both peers and the wider US Food industry.
The P/E ratio compares what investors are paying today for each dollar of current earnings. For a mature branded food group like General Mills, it is a quick way to see how the market is weighing a mix of steady demand, modest forecast revenue growth of 0.5% per year and earnings that analysts currently expect to decline by an average of 6.8% per year over the next 3 years.
Here, the gap is clear. General Mills trades on 10.3x earnings, while the US Food industry sits at 24.1x and a peer average is 42.8x. Even against an estimated fair P/E of 13.8x, the current multiple is lower, which points to a valuation level the market could move towards if sentiment or expectations shift. Explore the SWS fair ratio for General Mills
Result: Price-to-Earnings of 10.3x (UNDERVALUED)
However, the recent 6.8% annual earnings decline and 27.2% three year total return decline could signal that near term profit pressure and sentiment shifts continue to challenge the undervaluation story.
Find out about the key risks to this General Mills narrative.
The low 10.3x P/E suggests General Mills looks inexpensive, and our DCF model provides an additional perspective. With the share price at $48.58 compared with an estimated future cash flow value of $108.20, the model indicates a wide undervaluation that raises fresh questions about what the market is pricing in.
