General Mills Inc., FCFE calculation

US$ in thousands

12 months ended:	May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
Net earnings attributable to General Mills	1,752,700)	2,131,000)	1,657,500)	1,697,400)	1,221,300)	1,824,400)
Net earnings attributable to redeemable and noncontrolling interests	33,500)	32,000)	43,600)	39,400)	38,100)	36,900)
Net noncash charges	1,028,300)	135,900)	844,200)	634,800)	1,068,700)	711,900)
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures	(7,500)	542,100)	(232,000)	258,200)	214,700)	(32,200)
Net cash provided by operating activities	2,807,000)	2,841,000)	2,313,300)	2,629,800)	2,542,800)	2,541,000)
Purchases of land, buildings, and equipment	(537,600)	(622,700)	(684,400)	(729,300)	(712,400)	(663,500)
Proceeds from disposal of land, buildings, and equipment	14,300)	1,400)	4,200)	4,400)	11,000)	6,600)
Change in notes payable	(66,300)	327,500)	962,400)	(323,800)	(509,800)	572,900)
Issuance of long-term debt	339,100)	6,550,000)	1,072,100)	542,500)	2,253,200)	1,673,000)
Payment of long-term debt	(1,493,800)	(600,100)	(1,000,000)	(1,000,400)	(1,145,800)	(1,444,800)
Free cash flow to equity (FCFE)	1,062,700)	8,497,100)	2,667,600)	1,123,200)	2,439,000)	2,685,200)

Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).

An analysis of the cash flow dynamics reveals a marked divergence between the stability of net cash provided by operating activities and the significant volatility of free cash flow to equity (FCFE) over the six-year period from 2014 to 2019.

Operating Cash Flow Trends: Net cash provided by operating activities remained relatively consistent, fluctuating within a narrow range between 2.3 billion and 2.8 billion US dollars. A slight decline was observed in 2017, reaching a period low of 2.3 billion US dollars, followed by a recovery to a peak of 2.8 billion US dollars in 2018. This indicates a stable core capacity to generate cash from primary business operations.
FCFE Volatility and Outliers: In contrast to operating cash flows, FCFE exhibited extreme variance. While FCFE was comparable to operating cash flow in 2014 and 2015, it experienced a sharp contraction in 2016 to 1.1 billion US dollars. The most notable anomaly occurred in 2018, where FCFE surged to 8.5 billion US dollars, far exceeding the operating cash flow of 2.8 billion US dollars for the same period. This was followed by a precipitous decline in 2019 to 1.06 billion US dollars.
Analysis of Cash Flow Discrepancies: The discrepancy between operating cash flow and FCFE suggests significant fluctuations in capital expenditures and net borrowing. The massive spike in FCFE during 2018 indicates a substantial net inflow of cash, likely resulting from significant debt issuance or the divestiture of assets. Conversely, the sharp reductions in FCFE observed in 2016 and 2019 suggest periods of intensified capital investment or substantial debt repayment, as these values fell significantly below the steady levels of cash generated by operations.

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General Mills Inc., current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding	604,816,813
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)	1,062,700)
FCFE per share	1.76
Current share price (P)	53.18
Valuation Ratio
P/FCFE	30.27
Benchmarks
P/FCFE, Competitors¹
Coca-Cola Co.	70.99
Mondelēz International Inc.	14.34
PepsiCo Inc.	14.69
Philip Morris International Inc.	24.00

Based on: 10-K (reporting date: 2019-05-26).

¹ Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

General Mills Inc., historical P/FCFE calculation, comparison to benchmarks

	May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
No. shares of common stock outstanding¹	601,959,611	593,367,848	577,099,679	597,020,906	598,737,719	612,508,457
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)²	1,062,700)	8,497,100)	2,667,600)	1,123,200)	2,439,000)	2,685,200)
FCFE per share³	1.77	14.32	4.62	1.88	4.07	4.38
Share price^1, 4	52.52	44.26	54.97	71.32	56.59	53.05
Valuation Ratio
P/FCFE⁵	29.75	3.09	11.89	37.91	13.89	12.10
Benchmarks
P/FCFE, Competitors⁶
Coca-Cola Co.	—	—	—	—	—	—
Mondelēz International Inc.	—	—	—	—	—	—
PepsiCo Inc.	—	—	—	—	—	—
Philip Morris International Inc.	—	—	—	—	—	—

Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).

¹ Data adjusted for splits and stock dividends.

² See details »

³ 2019 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,062,700,000 ÷ 601,959,611 = 1.77

⁴ Closing price as at the filing date of General Mills Inc. Annual Report.

⁵ 2019 Calculation
P/FCFE = Share price ÷ FCFE per share
= 52.52 ÷ 1.77 = 29.75

⁶ Click competitor name to see calculations.

The Price to Free Cash Flow to Equity (P/FCFE) ratio for the period between 2014 and 2019 is characterized by significant volatility, primarily driven by substantial fluctuations in FCFE per share rather than movements in the share price.

Share Price Trends: The share price exhibited a non-linear trajectory, reaching a peak of 71.32 USD in 2016. This was followed by a decline to a period low of 44.26 USD in 2018, before recovering to 52.52 USD by May 2019.
FCFE Per Share Dynamics: Free Cash Flow to Equity per share demonstrated extreme instability. Following relatively stable figures of 4.38 USD and 4.07 USD in 2014 and 2015, a sharp contraction occurred in 2016 (1.88 USD). A significant outlier was recorded in 2018, where FCFE per share surged to 14.32 USD, before returning to a low of 1.77 USD in 2019.
P/FCFE Ratio Interpretation: The P/FCFE ratio mirrored the instability of the cash flow figures. The ratio spiked to 37.91 in 2016 and 29.75 in 2019, both coinciding with periods of diminished FCFE per share. Conversely, the ratio reached a minimum of 3.09 in 2018, directly corresponding with the peak in FCFE per share. This suggests that the valuation multiple was heavily influenced by erratic cash flow performance rather than a steady shift in market valuation or share price trends.

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General Mills Inc. (NYSE:GIS)

Price to FCFE (P/FCFE)

Free Cash Flow to Equity (FCFE)

Price to FCFE Ratio, Current

Price to FCFE Ratio, Historical