Deutsche Bank Gives Earnings Review On General Mills; Reiterates Buy

Deutsche Bank's Buy opinion on General Mills GIS is based on leading share in many U.S. categories, strong new products, LT productivity efforts, solid FCF and very reasonable valuation. Based on Deutsche Bank's initial work, valuation is even more compelling with the addition of Yoplait. Operating EPS of $0.57 was $0.01 above Deutsche Bank's forecast with sales growth in line with its model. EBIT of $618 mil. was above expectations but driven by Intl, Foodservice and lower advertising. Non-operating items were not a factor vs. expectations. The bear thesis on General Mills has played out over the last year as the stock has under-performed while fundamentals have moderated. But Deutsche Bank thinks too much focus on “momentum” is now obscuring valuation for what it views as arguably one of the best run packaged food companies. Deutsche Bank has a $42 PT and Buy rating on GIS GIS closed Wednesday at $36.91