General Mills - Final Thoughts

Ticker Symbol: GIS

Final Thoughts

Barron's gave General Mills a healthy diagnosis, saying the stock is undervalued trading near its 52-week low near $49/share. In addition to valuation, Barron's believes General Mills primary brands (Cheerios, Yoplait, Progresso, and Betty Crocker) will benefit from more people eating at home as opposed to going out.

Back in February, General Mills forecasted FY Q4 margins would improve thanks to lower commodity prices. CEO Ken Powell factored in better margin returns in projecting FY earnings of $3.83 to $3.87/share ex-items.

Analysts are forecasting a 7% to 10% increase in revenues during 2009, which would be a great accomplishment considering headwinds like rising unemployment and the prospect of an appreciating dollar. General Mills anticipates a $20 million Q4 pretax charge and a $5 million pretax charge in 2010. General Mills offers a very attractive 43 cent dividend, yielding 3.5%.

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