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General Mills, Inc. (GIS): Low Beta Stock With a Good Upside Potential

Attractively Priced at Current Levels

Let’s first look at the valuation metrics of General Mills, Inc. (NYSE:GIS), Kellogg Company (NYSE:K) and Campbell Soup Company (NYSE:CPB).

Company Kellogg Campbell Soup General Mills
Forward P/E 16.26 17.25 16.41
PEG Ratio 2.28 2.97 2.22

We can see that General Mills, Inc. (NYSE:GIS) is trading in-line with Kellogg Company (NYSE:K)’s and at a slight discount to Campbell Soup Company (NYSE:CPB). However, the company also has best-in-class expected growth rate to support its premium valuation and looks attractively priced on a PEG basis. Kellogg’s has a similar PEG ratio but Campbell Soup looks expensive on the PEG basis.

Let’s now take a look at the profit margins of these companies.

Company Kellogg Campbell Soup General Mills
Profit Margin 6.3% 8.9% 10.5%

From the profitability standpoint also, General Mills, Inc. (NYSE:GIS) again seems to be the clear winner. The company has been performing consistently over the last decade and maintained its profit margin around 11% over the last 10 years.

In my opinion, General Mills, Inc. (NYSE:GIS) continues to exhibit the strongest operating momentum in the group despite a difficult and volatile macro environment, and therefore should trade at a premium multiple to the group. The company provides a stable investment option for dividend investors given its extremely low beta. Moreover, General Mills commitment to shareholder value is highly impressive and shareholder friendly activities like dividends and share repurchases should limit any downside risk.


Neha Gupta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Low Beta Stock With a Good Upside Potential originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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