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What Should You Know About The Future Of General Mills, Inc.'s (NYSE:GIS)?

Simply Wall St

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The latest earnings release General Mills, Inc.'s (NYSE:GIS) announced in June 2019 signalled that the company faced a immense headwind with earnings deteriorating by -18%. Below is a brief commentary on my key takeaways on how market analysts perceive General Mills's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for General Mills

Analysts' expectations for this coming year seems positive, with earnings growing by a robust 14%. This growth seems to continue into the following year with rates reaching double digit 18% compared to today’s earnings, and finally hitting US$2.1b by 2022.

NYSE:GIS Past and Future Earnings, July 18th 2019

Although it’s informative understanding the growth each year relative to today’s value, it may be more valuable analyzing the rate at which the business is moving every year, on average. The advantage of this method is that we can get a bigger picture of the direction of General Mills's earnings trajectory over the long run, irrespective of near term fluctuations, 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 7.2%. This means that, we can assume General Mills will grow its earnings by 7.2% every year for the next couple of years.

Next Steps:

For General Mills, there are three important aspects you should look at:

  1. 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.
  2. 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.
  3. 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!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.