• Investors may be wondering whether General Mills is starting to look like value at its current share price, or if the stock still does not stack up on valuation grounds.
• The stock last closed at US$35.07, with returns of 1.7% over 7 days, a 6.9% decline over 30 days, and longer term returns of a 23.3% decline year to date and a 31.9% decline over 1 year.
• These moves have come as investors continue to reassess packaged food companies and their sensitivity to changing consumer habits and cost pressures. Broader conversations about pricing power, brand strength and input costs across the food sector provide more context for where General Mills is trading today.
• General Mills currently has a valuation score of 5/6. The rest of this article will walk through the key valuation approaches behind that score, then finish with a more rounded way to think about what the stock might be worth.

Approach 1: General Mills Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It is essentially asking what all those future dollars are worth in today’s terms.

For General Mills, the model used is a 2 Stage Free Cash Flow to Equity approach, built on cash flow projections. The company’s latest twelve month free cash flow is about $1.57b. Analyst estimates and extrapolations suggest free cash flow reaching around $3.20b by 2035, with interim projections between these points based on a mix of analyst inputs for the next few years and then Simply Wall St extrapolations after that.

When all those projected cash flows are discounted back, the resulting estimated intrinsic value is $118.27 per share. Against the recent share price of $35.07, this implies the stock is 70.3% undervalued according to this model. This is a wide gap for a large, established food company.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests General Mills is undervalued by 70.3%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: General Mills Price vs Earnings

P/E is a useful way to look at profitable companies because it ties what you pay directly to the earnings each share is generating today. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when growth expectations are more modest or risks are higher.

General Mills currently trades on a P/E of 8.49x. That compares with a Food industry average P/E of 16.96x and a peer group average of 23.24x, so the stock is on a lower multiple than both of those benchmarks.

Simply Wall St also calculates a “Fair Ratio” for General Mills, which is the P/E multiple that would be expected given factors such as the company’s earnings growth profile, profit margin, industry, market cap and risk characteristics. For General Mills, this Fair Ratio is 15.04x. This is more tailored than a simple comparison with industry or peers, because those broad groups can include companies with very different growth and risk profiles.

Comparing the Fair Ratio of 15.04x with the current P/E of 8.49x suggests the stock is trading below what this framework would indicate.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your General Mills Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in, giving you a clear story behind the numbers by linking your view on General Mills to specific assumptions for future revenue, earnings, margins and a fair value, all within Simply Wall St’s Community page that is used by millions of investors.

A Narrative is your structured view on a company that ties together what you think is driving the business, how that might flow into a financial forecast and what price you believe fairly reflects those assumptions. You can then compare this with the current share price to help decide whether the stock looks interesting to you or not.

Because Narratives on Simply Wall St update automatically when new data, news or earnings are added, you are not locked into a one off view. You can see how your fair value changes over time as the facts change.

For General Mills, one investor might build a more optimistic Narrative that leans toward a fair value close to US$53.61, while another might choose a more cautious Narrative closer to US$35.00. Seeing those side by side makes it easier to decide which story feels more reasonable to you.

For General Mills, however, we will make it really easy for you with previews of two leading General Mills Narratives:

Fair value in this narrative: US$40.58 per share

Implied discount to this fair value at US$35.07: about 13.6% undervalued

Modelled revenue growth rate: 9.21%

• Analysts in this camp see revenue broadly holding up, with margins easing back over the next few years rather than collapsing.
• They factor in heavier reinvestment into pricing, marketing and product refreshes, which could weigh on near term earnings while aiming to support the brands.
• The consensus price target clusters around the low US$40s, with a wide spread between the most optimistic and most cautious analysts, so the story relies on your view of how those trade offs between investment and profit play out by 2029.

Fair value in this narrative: US$35.00 per share

Implied premium to this fair value at US$35.07: about 0.2% overvalued

Modelled revenue growth rate: 1.91% annual revenue decline

• The bearish view builds in annual revenue declines and a step down in profit margins from the low teens toward around 9%, assuming promotional intensity and higher overheads linger.
• It highlights risks around heavier media spend, more complex pet and international operations and portfolio changes that could limit sales momentum and keep earnings under pressure.
• On these assumptions, a fair value close to US$35.00 sits below the wider analyst consensus, so agreeing with this view means expecting slower growth and softer profitability than the broader market is currently modelling.

Do you think there's more to the story for General Mills? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.