Analyst Note| Rebecca Scheuneman, CFA |
Narrow-moat General Mills realized 4% organic sales growth in its fiscal 2021, in line with its two-year average normalizing the pandemic, which beat our 3% estimate. Its annual adjusted operating margin increased 10 basis points to 17.4%, in line with our forecast, as lower administrative expenses more than offset cost inflation. We do not plan to alter our $59 fair value estimate materially, as the top line beat and a bump in long-term pet food sales (given the high-single-digit increase in pet adoptions during the pandemic) should be offset by an assumed higher U.S. tax rate in fiscal 2023 and beyond. As shares appearing fully valued, we suggest investors consider wide-moat Kellogg instead.