General Mills’ Valuation and Analysts’ Recommendations

Ratings and target price

After General Mills’ (GIS) fourth-quarter fiscal 2019 release, Evercore ISI lowered its target price on the stock to $54 from $56. Of the 18 analysts covering the stock, 12 recommend “hold,” four recommend “buy,” and two recommend “sell.” Their average target price of $51.63 is roughly on par with its June 26 closing price. Most analysts covering Hershey (HSY), J.M. Smucker (SJM), and Kellogg’s (K) also recommend “hold.”

General Mills’ Valuation and Analysts’ Recommendations

Valuation summary

General Mills stock is trading at 15.5 times its fiscal 2020 estimated EPS of $3.32 and 14.9 times its fiscal 2021 estimated EPS of $3.44—both of which look unattractive based on its expected EPS growth of 3% and 4%, respectively, in fiscal 2020 and 2021.

General Mills expects its top-line growth to moderate in fiscal 2020, reflecting a tough YoY (year-over-year) comparison as the company annualizes its Blue Buffalo acquisition. Its organic volumes could remain muted in the coming quarters. The company expects its adjusted EPS to grow slowly due to its margins and a minimal boost from its tax rate, which General Mills estimates will be flat YoY.