0(0%) Volume: 2,523,535 3:15AM EST| Market Cap : 32.24 B | Enterprise Value : 45.83 B | P/E (TTM) : 15.32 | P/B : 4.18 |
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General Mills's Enterprise Value for the quarter that ended in Nov. 2019 was $45,821 Mil. General Mills's EBIT for the trailing twelve months (TTM) ended in Nov. 2019 was $2,734 Mil. General Mills's Earnings Yield (Joel Greenblatt) for the quarter that ended in Nov. 2019 was 5.97%.
During the past 13 years, the highest Earnings Yield (Joel Greenblatt) of General Mills was 10.10%. The lowest was 4.60%. And the median was 6.80%.
Joel Greenblatt's definition of earnings yield has the same problems the regular earnings yield does. It does not consider the growth of the company. It only looks at one-year's business operation. For cyclical companies, the earnings yield is usually highest at the peak of the business cycle. But these earnings are rarely sustainable.
A better indicator of the attractiveness of an investment which takes growth into account is the Forward Rate of Return (Yacktman) %. General Mills's Forward Rate of Return (Yacktman) % for the quarter that ended in Nov. 2019 was 9.30%. The Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| General Mills Quarterly Data | ||||||||||||||||||||
| Feb15 | May15 | Aug15 | Nov15 | Feb16 | May16 | Aug16 | Nov16 | Feb17 | May17 | Aug17 | Nov17 | Feb18 | May18 | Aug18 | Nov18 | Feb19 | May19 | Aug19 | Nov19 | |
| Earnings Yield (Joel Greenblatt) % |
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6.35 | 6.54 | 5.92 | 5.75 | 5.97 |
* The bar in red indicates where General Mills's Earnings Yield (Joel Greenblatt) % falls into.
In his book, The Little That Beat the Market, hedge fund manager Joel Greenblatt defines Earnings Yield as operating income divided by enterprise value.
General Millss Earnings Yield (Joel Greenblatt) for the fiscal year that ended in May. 2019 is calculated as
| Earnings Yield (Joel Greenblatt) | = | EBIT | / | Enterprise Value |
| = | 2609.4 | / | 44111.136 | |
| = | 5.92 % |
General Mills's Earnings Yield (Joel Greenblatt) for the quarter that ended in Nov. 2019 is calculated as
| Earnings Yield (Joel Greenblatt) | = | EBIT (TTM) | / | Enterprise Value |
| = | 2733.6 | / | 45,821 | |
| = | 5.97 % |
General Mills's EBIT for the trailing twelve months (TTM) ended in Nov. 2019 was 746.4 (Feb. 2019 ) + 506.5 (May. 2019 ) + 670.6 (Aug. 2019 ) + 810.1 (Nov. 2019 ) = $2,734 Mil.
Joel Greenblatt defines the earnings yield using the above equation because it more accurately reflects the company's profitability relative to its stock price. Items like interest payment and tax etc. are not directly related to the company's operational profitability.
Enterprise Value instead of market cap (share price) is used in the calculation because it is the real price stock and bond investors together pay for the company.
Joel Greenblatts definition of earnings yield has the same problems the regular earnings yield does. It does not consider the growth of the company. It only looks at one-years business operation. For cyclical companies, the earnings yield is usually highest at the peak of the business cycle. But these earnings are rarely sustainable.
Forward Rate of Return (Yacktman) % based on Don Yacktman's definition is a better measure of the expected rate of return for a stock.
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- Fool 2020-02-15 15:13:00
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