DCF Studio

    GIS · NYQ · Consumer Defensive

    General Mills, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 70.94

    Market price

    USD 36.32

    Implied upside

    +95.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 70.94+95.3%
    Exit multiple
    USD 36.29-0.1%
    Market price
    USD 36.32

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 17.9bnUSD 17.4bnUSD 16.9bnUSD 16.4bnUSD 15.9bn-2.9%
    EBITUSD 2.9bnUSD 2.9bnUSD 2.8bnUSD 2.7bnUSD 2.6bn-2.9%
    NOPATUSD 2.4bnUSD 2.3bnUSD 2.2bnUSD 2.2bnUSD 2.1bn-2.9%
    Add depreciation & amortisationUSD 504.9mUSD 490.5mUSD 476.5mUSD 462.9mUSD 449.8m-2.9%
    Less capital expenditureUSD -602.7mUSD -585.5mUSD -568.8mUSD -552.6mUSD -536.9m-2.9%
    Less increase in working capitalUSD 23.5mUSD 22.8mUSD 22.2mUSD 21.5mUSD 20.9m+2.9%
    Free cashflow to firmUSD 2.3bnUSD 2.2bnUSD 2.2bnUSD 2.1bnUSD 2.0bn-2.9%
    Discount factor0.97320.92170.87300.82680.7831-
    Present valueUSD 2.2bnUSD 2.0bnUSD 1.9bnUSD 1.7bnUSD 1.6bn-8.0%
    Present Value Of The ForecastUSD 9.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.313Reported -0.025, pulled toward 1.0 (Blume)
    Cost of equity6.72%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 19.4bn58.2% of capital
    Total debtUSD 13.9bn41.8% of capital, book value as a proxy
    Tax rate19.9%Effective, capped at statutory
    WACC5.58%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 70.94

    82% of EV

    Forecast FCFF, final year
    USD 2.0bn
    Capex at depreciation, working capital in reinvestment
    USD 2.1bn
    Less reinvestment at g/ROIC (22.8% of NOPAT)
    USD -478.4m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    11.0%
    Terminal value, undiscounted
    USD 53.8bn
    Terminal value, discounted
    USD 42.2bn
    Enterprise value
    USD 51.6bn
    Less net debt
    USD 13.5bn
    Equity value
    USD 38.1bn

    Exit at 9.8x EBITDA

    Value per shareUSD 36.29

    71% of EV

    Terminal value, undiscounted
    USD 30.1bn
    Terminal value, discounted
    USD 23.5bn
    Enterprise value
    USD 33.0bn
    Less net debt
    USD 13.5bn
    Equity value
    USD 19.5bn

    Spread between methods: 65%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.58%133.35168.66236.40419.772771.44
    4.58%83.5495.86114.03143.57200.22
    5.58%58.0963.6370.9481.0195.85
    6.58%42.6245.4348.9053.2959.07
    7.58%32.2233.7235.4937.6240.24

    Outlined: this model. Green text: above today's price of 36.32. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-2.9%-12.1%-9.3pp
    EBIT margin16.4%10.5%-5.9pp
    Discount rate5.6%7.5%+1.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.