Monday, September 10, 2012

General Mills (GIS) 2012 Review

General Mills Inc., GIS, processes and markets such well known products as Cheerios, Wheaties, Total, Chex, Betty Crocker, Bisquick, Hamburger Helper, Yoplait and Progresso. 

The company has grown profits and dividends at a 7-10% pace over the last ten years earning a 20%+ return on equity. This performance should continue as a result of:

(1) an outstanding portfolio of fast growing brands

(2) a steady pipeline of new products which enhance sales and take market share,

(3) an aggressive cost cutting program,

(4) expansion into emerging markets which should account for 70% of food growth though 2012,

(5) acquisitions (latest: Yoplait Int’l, Parampara Foods [India], Yoki [Brazil])

(6) management is committed to enhancing shareholder value via increasing dividends and share buy backs.


(1) GIS international exposure increases the risk of loss from currency fluctuation,

(2) during periods of economic malaise, consumers tend to trade down to generic brands,

(3) rising commodity costs.

GIS is rated A+ by Value Line, has a 49% debt to equity ratio and its stock yields 3.4%

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
GIS 3.4% 7% 50% 8
IND 2.6 8 41 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
GIS 49% 26% 1 10% A+
IND 36 17 NA 7 NA


Note: GIS stock made good progress off its March 2009 low, surpassing the downtrend off the September 2008 high (red line) and the November 2008 trading high (green line). Long term, GIS is in an uptrend (straight blue lines). Intermediate term, it is in a trading range (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a 50% position in GIS (having Sold Half at $38 late last year). The upper boundary of its Buy Value Range is $29. The lower boundary of its Sell Half Range is $40.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.