What Are Analysts Expecting From General Mills Inc (NYSE:GIS) In The Years Ahead?
General Mills Inc’s (NYSE:GIS) most recent earnings update in May 2018 confirmed that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 28.6%. Investors may find it useful to understand how market analysts view General Mills’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for General Mills
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings declining by a double-digit -13.8%. In the next couple of years, earnings will begin to improve, increasing year on year, and arriving at US$2.07b by 2021.
While it is useful to understand the growth rate year by year relative to today’s level, it may be more beneficial to evaluate the rate at which the business is growing every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of General Mills’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -1.4%. This means that, we can assume General Mills will chip away at a rate of -1.4% every year for the next few years.
Next Steps:
For General Mills, there are three fundamental factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is GIS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GIS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GIS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
