General Mills, Inc.GISNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $93.94 per share(market-calibrated)

+110.9%

Upside to Fair Value

Current

$44.54

Pure Model

$103.81

Fair Value

$93.94

Bull Case

$114.24

Bear Case

$96.35

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $103.81.

What's Driving This Ratingfor GIS

↓

CapEx normalizing toward maintenance

Historical CapEx is 3.27% of revenue (heavy investment phase). Model fades this to 3.00% by Year 10, freeing up ~$55M in annual FCF. This is the biggest driver of long-term cash flow improvement.

→

Moderate revenue growth

Analyst consensus projects -5.46% revenue growth, fading to 2.50% by Year 10. Revenue reaches $20.0B (vs $19.5B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 67.34% indicates efficient cash generation. FCF reaches $2.8B by Year 10 (14.03% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)-0.10

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)4.07%

Cost of Debt

Pre-tax Cost of Debt2.93%

Tax Rate19.83%

After-tax Cost of Debt2.35%

Equity Weight (E/V)61.75%

Debt Weight (D/V)38.25%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (61.75% × 4.07%) + (38.25% × 2.35%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$18.4B	$18.5B	$18.6B	$18.9B	$20.0B
EBIT	$3.3B	$3.3B	$3.3B	$3.4B	$3.6B
Tax	$656M	$658M	$663M	$672M	$712M
NOPAT	$2.7B	$2.7B	$2.7B	$2.7B	$2.9B
+ Depreciation	$531M	$533M	$537M	$544M	$577M
- Capex	$603M	$594M	$586M	$583M	$600M
- Δ NWC	-$106M	$30M	-$2M	$18M	$49M
Free Cash Flow	$2.7B	$2.6B	$2.6B	$2.7B	$2.8B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$2.5B	$2.2B	$2.0B	$1.8B	$1.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.8B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$95.9B

PV of Terminal Value$56.2B

Exit Multiple Method

Year 10 EBITDA$4.2B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$83.4B

PV of Terminal Value$48.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$20.0B

PV of Terminal Value$56.2B

Enterprise Value$76.2B

(-) Net Debt$14.9B

Equity Value$61.2B

Shares Outstanding555M

Price per Share$110.43

Exit Multiple Method

PV of Projected FCFs$20.0B

PV of Terminal Value$48.8B

Enterprise Value$68.8B

(-) Net Debt$14.9B

Equity Value$53.9B

Shares Outstanding555M

Price per Share$97.18

Pure Model Fair Value

$103.81

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$157.31	$149.94	$142.93	$136.24	$129.87
4.50%	$114.54	$125.89	$142.93	$136.24	$129.87
5.50%	$90.78	$96.36	$103.81	$114.23	$129.87
6.50%	$74.90	$78.09	$82.08	$87.21	$94.05
7.50%	$63.15	$65.15	$67.56	$70.49	$74.16

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$96.35

116.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: -0.12

Base Case

$103.81

133.1% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: -0.10

Bull Case

$114.24

156.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-5.46%

Year 3 Revenue Growth1.67%

Year 5 Revenue Growth-0.09%

Year 7 Revenue Growth0.94%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin17.95%

Tax Rate19.83%

Historical Capex / Rev3.27%

Terminal Capex / Rev3.00%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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