As of May 27, 2025, General Mills Inc's estimated intrinsic value ranges from $62.78 to $110.26 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $110.26 | +106.6% |
| Discounted Cash Flow (5Y) | $91.01 | +70.5% |
| Dividend Discount Model (Multi-Stage) | $70.04 | +31.2% |
| Dividend Discount Model (Stable) | $68.19 | +27.7% |
| Earnings Power Value | $62.78 | +17.6% |
Is General Mills Inc (GIS) undervalued or overvalued?
With the current market price at $53.38, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate General Mills Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.34 | 0.55 |
| Cost of equity | 5.4% | 8.0% |
| Cost of debt | 4.0% | 4.8% |
| Tax rate | 19.1% | 19.5% |
| Debt/Equity ratio | 0.44 | 0.44 |
| After-tax WACC | 4.7% | 6.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $91 | $63,506M | 80.7% |
| 10-Year Growth | $110 | $74,044M | 65.0% |
| 5-Year EBITDA | $63 | $47,988M | 74.5% |
| 10-Year EBITDA | $84 | $59,605M | 56.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,670M |
| Discount Rate (WACC) | 6.7% - 4.7% |
| Enterprise Value | $39,807M - $56,280M |
| Net Debt | $13,666M |
| Equity Value | $26,141M - $42,614M |
| Outstanding Shares | 548M |
| Fair Value | $48 - $78 |
| Selected Fair Value | $62.78 |
| Metric | Value |
|---|---|
| Market Capitalization | $29231M |
| Enterprise Value | $42897M |
| Trailing P/E | 11.42 |
| Forward P/E | 12.15 |
| Trailing EV/EBITDA | 9.50 |
| Current Dividend Yield | 459.72% |
| Dividend Growth Rate (5Y) | 3.33% |
| Debt-to-Equity Ratio | 0.44 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $33.08 |
| Discounted Cash Flow (5Y) | 25% | $22.75 |
| Dividend Discount Model (Multi-Stage) | 20% | $14.01 |
| Dividend Discount Model (Stable) | 15% | $10.23 |
| Earnings Power Value | 10% | $6.28 |
| Weighted Average | 100% | $86.34 |
Based on our comprehensive valuation analysis, General Mills Inc's weighted average intrinsic value is $86.34, which is approximately 61.8% above the current market price of $53.38.
Key investment considerations:
Given these factors, we believe General Mills Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.