Investment Thesis
General Mills demonstrates solid profitability with strong operating margins (21.6%) and healthy ROE (20.6%), supported by consistent free cash flow generation ($1.3B). However, weak liquidity metrics (0.56x current ratio), elevated leverage (1.18x debt/equity), and declining net income (-1.0% YoY) temper enthusiasm, suggesting a mature business managing debt burden rather than experiencing growth.
Strengths
- Strong operating margin of 21.6% indicates efficient core business operations
- Robust free cash flow of $1.3B demonstrates ability to service debt and fund operations
- Solid return on equity of 20.6% reflects efficient use of shareholder capital
- Healthy interest coverage ratio of 7.7x shows manageable debt servicing capacity
Risks
- Critically weak current ratio of 0.56x and quick ratio of 0.36x indicate potential liquidity stress
- Elevated debt-to-equity ratio of 1.18x with $11.0B long-term debt creates financial inflexibility
- Net income declining year-over-year (-1.0%) despite stable revenue suggests margin pressure
- Low gross margin of 10.7% typical of commodity food industry leaves limited pricing power
Key Metrics to Watch
- Net income trend and margin progression in coming quarters
- Working capital management and current ratio improvement trajectory
- Debt reduction progress and debt-to-equity ratio movement
- Operating cash flow sustainability and free cash flow consistency
Financial Metrics
Revenue
13.8B
Net Income
1.9B
EPS (Diluted)
$3.56
Free Cash Flow
1.3B
Total Assets
32.4B
Cash
785.5M
Profitability Ratios
Gross Margin
10.7%
Operating Margin
21.6%
Net Margin
13.9%
ROE
20.6%
ROA
5.9%
FCF Margin
9.1%
Balance Sheet & Liquidity
Current Ratio
0.56x
Quick Ratio
0.36x
Debt/Equity
1.18x
Debt/Assets
71.1%
Interest Coverage
7.69x
Long-term Debt
11.0B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-19T19:07:06.357944 |
Data as of: 2026-02-22 |
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