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General Mills, Inc. (GIS)

General Mills, Inc. (GIS). Justin Craigwell-Graham Charles Gambino Jacob Rapp 12/3/2009. Introduction. Company, Industry, Competitor, and Macroeconomic Analysis Financial Statement Analysis DuPont Analysis Pro Forma Analysis Valuation DCF Valuation Multiples Valuation

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General Mills, Inc. (GIS)

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  1. General Mills, Inc. (GIS) Justin Craigwell-Graham Charles Gambino Jacob Rapp 12/3/2009

  2. Introduction • Company, Industry, Competitor, and Macroeconomic Analysis • Financial Statement Analysis • DuPont Analysis • Pro Forma Analysis • Valuation • DCF Valuation • Multiples Valuation • Dividend Discount Model • Recommendation

  3. Company Overview • Founded in 1866 • Based in Minneapolis, MN • Approximately 30,000 employees • Website: www.generalmills.com

  4. Famous Products

  5. Company Overview • Three Segments • US Retail (68% of sales) • International (18%) • Bakeries & Food Service (14%) • Trends • Healthy/Organic • Convenient products

  6. Industry Overview • Consumer Food & Food Processing Industry • Large & Mature • Stable • Trends • Divestitures • Consolidations • Main Competitors • Kellogg, Kraft Foods, Campbell Soup, & HJ Heinz

  7. Competitors • Intraday 12/1/09

  8. Macroeconomic Overview • Subject to fluctuations in input prices and foreign exchange rates • GIS has done well historically in hedging these risks. • General Mills has the potential to perform well even during recessions • As consumers try to save money during economic downturns, they typically eat out less and buy more products to cook at home • As economy recovers in 2010 and beyond, strong product lines and broad distribution networks allow the company to maintain growth through expansion into international markets such as China • Product categories have historically grown 3-4% regardless of economic conditions

  9. SWOT

  10. Price Movement YTD

  11. S&P and Competitors

  12. DuPont Analysis

  13. DuPont Analysis

  14. Management Evaluation

  15. Relative Valuation

  16. Valuation Summary • DCF • $65.45 to $79.99 • Multiples • P/E: $64.41 to $72.31 • P/B: $26.55 to $269.53 • P/S: $44.28 to $72.90 • EBITDA: $39.34 to $86.17 • DDM • $39.47 to $48.24

  17. Recommendation • Closing price on 12/01/09: $68.68 • Recommendation: Add to Watch List • GIS is currently fairly valued • Possible Benefits: • Large dividend • Diversification benefits • Costs are well managed • Growth during all market cycles

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