Reasons we like General Mills●Market leaders

●Committed to innovation

●Committed to Shareholders

Company Background

-Sells products in over 100 countries

-General Mills was founded in 1928

-Currently the company holds more than 30 major brands

-History of innovative techniques: Shifting Consumer Demands

-Competitive Market Share

Company Background: Recent Events

-GIS bought Annie’s in 2014 to adapt to a shifting demand.

-Green Giant Sale- $700+ million.

-A recent Recall, has some worried, but is not to be feared

-Main competitor in the Cereal sector is Kellogs

Sector OverviewThe Packaged food industry is estimated to grow 4.5% in the next five years.

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SWOT ANALYSIS

● Rising demand● Industry growth rate

OPPORTUNITIES

● Net receivable is high● Possible Lawsuits

WEAKNESS

● Highly fluctuating input costs.● Less preference for processed foods

● Wide variety of product lines● Strong tradition of dividends.● International operations● Decrease in expenses● Increase in the ratio of operating cash flow to debt

STRENGTHS THREATS

Porter’s 5Buyer Power: Medium -- some switching costs, but few large retailers have power (Wal Mart)

Supplier Power: Medium -- contracts, raw materials are commodities

Barriers to New Entrants: High -- large start-up costs, high brand loyalty, distribution access

Threat of Substitutes: High -- generic brands, other options

Intensity of Competitive Rivalry: High -- many competitors, threat of substitutes, but GIS has good standing

Historical DividendsRegular dividends without interruption or

reduction for 117 years

Dividend growth at compound rate of 13% over the past 5 years

Steady dividend yield of 2.5% - 3.3% over the past 5 years

Payout ratio at 80.3%, average increase of 18.8% over 5 years

International Market Exposure● 30% in international sales, up from 17%

in 2011, with 2.6% average 5 year growth

● 60% in domestic sales

● Plans to expand further into international markets, but should be at a steady pace

Risk AnalysisHighly competitive and changing

sector.

Input prices have proved volatile.

Interest rates- Low amount of non-fixed rates.

Currency Fluctuations

Currency, Interest Rates, and Inputs have been financially hedged

Relative Valuation

ValuationsCorrelated with

our portfolio at .3397

DCF @ 6.5%

12% upside

Investment Thesis● Strong history of being market leaders in innovation

○ 150 new products last year○ Beat Campbell’s to healthy soups

● We expect net sales growth to remain 2-4%○ This serves as a solid foundation for company stability into the future

● Commitment to shareholder returns○ Strong Dividends--117 years○ Maintain dividend yield @ 2-3%

Recommendation: Buy at Market Price

Q&A