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Back of Napkin

General Mills, Inc. GIS

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The bet you're really making is that people keep buying Cheerios, Blue Buffalo dog food, and Häagen-Dazs, and that General Mills can hold its sales even as shoppers reach for cheaper store brands. You're betting the company can stop declining sales volumes, not just offset them with higher prices per box. Right now the year is going the wrong way: sales fell about 5% in the last year, and impairment and restructuring charges pushed the whole year to a small loss. You pay about eleven times what it earned once you set those charges aside, near the least anyone has paid for General Mills in a decade, well under the sixteen it usually costs and the sixteen its rivals fetch.

Key data

Price$38.29
52-week range$31.75 to $51.33
P/E, adj. TTM / fwd FY2810.8x / 11.9x
EV/EBITDA, TTM10.4x

GIS · price with moving averages

Daily · 6MWeekly · 3Y
$30$42$55$67$80 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

General Mills has made branded food for 160 years and sells it through the same grocers and mass retailers that stock every rival on the shelf beside it. The lineup is a handful of businesses: cereal (Cheerios, Chex), snack bars (Nature Valley), Blue Buffalo pet food, Häagen-Dazs ice cream, and meals and baking (Betty Crocker, Pillsbury, Old El Paso). It buys grain, dairy, and cocoa, turns them into shelf-stable packaged goods, and sells them at a price premium over the store brand sitting inches away. The moat is that premium: a yellow Cheerios box still clears the shelf faster than the cheaper oat rings next to it, and Blue Buffalo bought the company a lead in the pet aisle. Häagen-Dazs adds a physical footprint most food companies lack, 232 company-run ice cream parlors and 376 franchised ones, all outside the United States and Canada.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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