(GIS-NYSE) SUMMARY. Risk Level *

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1 January 23, 2015 General Mills Inc. Current Recommendation SUMMARY DATA NEUTRAL Prior Recommendation Outperform Date of Last Change 07/14/2005 Current Price (01/22/15) $54.78 Target Price $ Week High $ Week Low $46.86 One-Year Return (%) Beta 0.17 Average Daily Volume (sh) 2,751,764 Shares Outstanding (mil) 604 Market Capitalization ($mil) $33,073 Short Interest Ratio (days) 5.93 Institutional Ownership (%) 67 Insider Ownership (%) 2 (GIS-NYSE) SUMMARY Risk Level * General Mills adjusted earnings of $0.80 per share in the second quarter of fiscal 2015 beat the Zacks Consensus Estimate of $0.76 as well as management s expectations due to a shift in timing of expenses. Earnings however, declined around 4% year over year as sales and margins remained weak. Revenues missed the consensus mark and declined 3% year over year as the company continues to battle weak demand in the U.S. and slowdown in some of the international markets. Encouragingly, however, margins improved sequentially despite year-over-year decline. Moreover, we are encouraged by General Mills aggressive plans for fiscal 2015 that include strong innovation, better marketing and further cost cuts. Also, the company enjoys sound fundamentals including a strong market share position in some leading food categories, growing international presence, strategic acquisitions and generous cash returns. Nevertheless, until the food industry trends and consumer constraints recover, a material improvement in the U.S. retail segment is difficult. Low Type of Stock Large-Growth Industry Food-Misc/Dvrsd Zacks Industry Rank * 191 out of 267 ZACKS CONSENSUS ESTIMATES Revenue Estimates (In millions of $) Q1 Q2 Q3 Q4 Year (Aug) (Nov) (Feb) (May) (May) Annual Cash Dividend $1.64 Dividend Yield (%) Yr. Historical Growth Rates Sales (%) 5.4 Earnings Per Share (%) 4.4 Dividend (%) 11.3 P/E using TTM EPS 20.3 P/E using 2015 Estimate 19.3 P/E using 2016 Estimate ,051 A 4,882 A 4,431 A 4,411 A 17,774 A ,373 A 4,876 A 4,377 A 4,284 A 17,910 A ,268 A 4,712 A 4,431 E 4,668 E 18,079 E ,425 E 4,931 E 18,384 E Earnings Per Share Estimates (EPS is operating earnings before non-recurring items, but including employee stock options expenses) Q1 Q2 Q3 Q4 Year (Aug) (Nov) (Feb) (May) (May) 2013 $0.66 A $0.86 A $0.66 A $0.53 A $2.69 A 2014 $0.70 A $0.83 A $0.62 A $0.67 A $2.82 A 2015 $0.61 A $0.80 A $0.68 E $0.75 E $2.84 E 2016 $0.70 E $0.88 E $3.04 E Zacks Rank *: Short Term 1 3 months outlook 3 - Hold Projected EPS Growth - Next 5 Years % 8 * Definition / Disclosure on last page Quarterly figures may not add up to annuals due to rounding off 2014 Zacks Investment Research, All Rights reserved North Canal Street, Chicago IL 60606

2 OVERVIEW Founded in 1928 and based in Minneapolis, MN, General Mills Inc. is a global manufacturer and marketer of branded consumer foods. The company also serves the foodservice and commercial baking industries. The company owns leading brands across 25 different food categories and is one of the leading companies in cereals. Its principal product categories include ready-to-eat cereals, yogurt, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars and frozen hot snacks), superpremium ice creams, baking mixes and ingredients, refrigerated and frozen dough and frozen and shelfstable vegetables. The company manufactures its products in 16 countries which are sold in more than 100 countries. General Mills operates in three segments: U.S. Retail, Convenience and Foodservice and International. U.S. Retail (59% of total fiscal 2014 sales): The U.S. Retail segment reflects business with wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, and drug, dollar and discount chains operating throughout the United States. Its principal product categories include ready-to-eat cereals, refrigerated yogurt, soup, meal kits, shelf-stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and a wide variety of organic products including granola bars, cereal and meal kits. Convenience and Foodservice (11%): The segment sells ready-to-eat cereals, snacks, yogurt, frozen breakfast, unbaked and fully baked frozen dough products, baking mixes, and flour to restaurants, cafeterias, food service distributors and bakeries. International (30%): The segment consists of retail and foodservice business outside the U.S. The segment also includes products manufactured in the U.S. for export, mainly to the Caribbean and Latin American markets as well as products manufactured for sale to the international joint ventures (JV). General Mills has 50% equity interest in two international JV Cereal Partners Worldwide (CPW) JV with Nestle, and Häagen-Dazs Japan, Inc. (HDJ) in Japan. CPW manufactures and distributes ready-toeat cereals and cereal bars outside the U.S. and Canada, and the HDJ JV manufactures, distributes and markets Häagen-Dazs ice cream and frozen novelties. In Jul 2011, General Mills acquired 51% controlling interest in Yoplait S.A.S., which holds the worldwide Yoplait brands, for approximately $1.2 billion. In fiscal 2013, the company acquired Yoki Alimentos S.A. in Brazil and Yoplait Ireland along with the Canadian Yoplait franchise license. In Oct 2014, General Mills bought California-based natural foods company, Annie s Inc., for $820 million. The company s long-term goals include low single-digit growth in net sales, mid single-digit growth in segment operating profit and high single-digit growth in adjusted earnings per share. Equity Research GIS Page 2

3 REASONS TO BUY Strong Brand Position: The company s core brands enjoy leading positions in attractive food categories. General Mills is one of leading cereal companies and its Yoplait brand is hugely popular in the fast-growing yogurt category. Its popular brands include Big G cereals, Betty Crocker and Hamburger Helper dinner mixes, Pillsbury refrigerated dough products, Progresso soups and Yoplait yogurt. General Mills now competes in five global categories, which together account for over $270 billion in worldwide sales and deliver foods that are convenient, nutritious and provide good taste at a good value. Moreover, these categories are highly responsive to innovation and capable of meeting evolving consumer needs. These categories include ready-to-eat cereals, super-premium ice creams, convenient meals, wholesome snack bars and yogurt. General Mills retail sales in the five global categories are growing at attractive rates and all of these have promising long-term growth potential, especially because of product innovation. The company regularly improves its product portfolio in order to build brand equity through strong consumer marketing. Over the past five years, its advertising spend for brand promotion has more than doubled. The U.S. media investment has increased at a compounded rate of 8% over the same time frame. In fiscal 2015, more than 20% of the U.S. media investment has been allocated for digital advertising which targets consumers better. Focus on Health & Nutrition: General Mills has an outstanding portfolio of growth products and brands, especially its healthy and convenience packages. Health and nutrition remains the key focus of the company and these products account for 68% of its U.S. retail volume. Through an innovative approach to new and established brands, General Mills plans to capitalize on the increasing global demand for packaged food. Over the years, the company has built a portfolio of natural and organic brands, beginning with the Small Planet Foods acquisition in 2000 and followed by Larabar, Mountain High, Liberte, Food Should Taste Good and Immaculate Baking buyouts. The company plans to target the growing number of health-conscious customers who prefer the convenience of packaged food without compromising on health. The addition of Annie's last year puts the company s overall natural and organic portfolio at over $600 million in net sales. It plans to expand its natural and organic business further in the near term. Focus on Innovation and Diversification: The company focuses on maintaining a steady pipeline of products to boost sales momentum and capture market share. In fact, in fiscal 2013 and 2014, products launched over the past 12 months contributed 5% to the sales growth. Some popular product launches in the recent past include Fiber One 90-calorie brownie snack bars, Larabar allnatural fruit and nut bars, Peanut Butter and Multi-Grain Cheerios cereals and Yoplait Greek 100 Calorie yogurt. Further, General Mills has a strong product pipeline for 2015 including new cereal and yogurt items and robust plans for other categories such as meals, dinner mixes and snacks. The company s continuous effort to introduce new products in the fast growing food categories bodes well for long-term growth. Expansion beyond the U.S. Markets: General Mills is gradually shifting the geographic mix of its business toward the international markets with particular focus on the emerging markets. Currently, more than 1/3 rd of its sales is generated from the international markets (including about $2 billion in sales from the emerging markets), much higher than 1/4 th of total sales barely five years ago. The addition of Yoplait International in Jul 2011 and Yoki in fiscal 2013 significantly increased the company s global scale. The two businesses have added almost $2 billion in net sales to the Equity Research GIS Page 3

4 company s portfolio. General Mills international sales have grown at a 16% compound rate over the last five years. Among the emerging markets, the company is increasingly focusing on expansion in China, Brazil, India and Russia where consumer spending growth is positive. In order to tap these fast growing markets, consumer companies are introducing newer capabilities and product lines. The demand for convenient and branded packaged food is growing as middle-class consumers in these countries shift to urban living. The rising pool of middle-class consumers in emerging markets thus represents a huge opportunity for branded consumer companies. In China, the company has an excellent portfolio with Haagen Dazs ice creams and Wanchai Ferry frozen foods which account for the majority of sales. Constant currency sales have grown at a 15% compound rate in China over the past four years. Management is expecting another year of doubledigit growth in In Brazil, the company s growth prospects have improved largely following the acquisition of Yoki Despite being small, the company s business in India, Middle East and North Africa is growing quickly. Expanding through Acquisitions: General Mills invests in new businesses through acquisitions that increases its marketing strength. In Oct 2014, the company bought natural foods company Annie s that will strengthen its foothold in the organic and natural foods market where sales have been growing at a 12% compounded rate over the last 10 years. In In fiscal 2012, the company made four strategic acquisitions Yoplait International, Parampara Foods in India, Food Should Taste Good in the United States and Yoki in Brazil. All these acquisitions strengthened General Mills presence in some fast-growing food categories and increased its sales and profits in fiscal 2013 and The acquisition of Yoplait International business introduced General Mills to the fast growing food category of yogurt. Yoplait is a leading supplier across all key segments in the U.S. yogurt market. The acquisition of Food Should Taste Good strengthened General Mills position in natural foods business. The addition of Yoki has significantly increased General Mills operational scale in Brazil. Some past acquisitions like Larabar fruit and nut snack bars in the U.S., Pasta Master chilled-on-trays in Australia and Mountain High yogurt in the U.S. have boosted the company s top- and bottom-line figures significantly. The company continues to be on the lookout for complementary tuck-in opportunities, especially in the emerging countries of India and Indonesia and in areas complementary to its five global platforms. Cost Saving Initiatives: The company s Holistic Margin Management (HMM) program uses productivity, mix and pricing management, trade and consumer spending efficiencies, administrative cost savings and supply chain productivity to negate the impact from rising costs. Under the program, the company is closing plants and eliminating jobs to negate input cost inflation and protect gross margins. The program has delivered $2.0 billion in cost savings over the past five years and is expected to generate total productivity savings of $4 billion by In fiscal 2015, General Mills expects to generate $400 million of HMM supply chain savings. In addition, the company is undertaking Project Century which includes streamlining the North American manufacturing and distribution operations targeting possible reduction in capacity and overhead costs. Also, under Project Catalyst, another restructuring plan, the company is making efforts to increase organizational effectiveness and reduce overhead expense. The two projects are expected to generate cost savings of $40 million in the second half of fiscal 2015, within $260 to $280 million in fiscal 2016 and more than $350 million in fiscal Equity Research GIS Page 4

5 General Mills also plans to combine certain Yoplait and General Mills operational facilities in the International segment to increase efficiencies and reduce costs. The restructuring plan is expected to generate cost savings of approximately $3 million in fiscal 2015 and a cumulative $12 million by fiscal Enhancing Shareholders Value: The company remains committed toward enhancing shareholders return via share repurchases and dividends. In recent years, dividends have increased at a compounded growth rate of 13% while average shares outstanding have declined 1% per year. The company increased its annual dividend payments for fiscal 2011, fiscal 2012, fiscal 2013 and fiscal 2014 by 17%, 8%, 15% and 17%, respectively. In fact, since 2004, the company has increased its dividend 15 times. Moreover, the company has maintained its consistent record of repurchasing shares, which totaled $1.2 billion, $313 million, $1 billion and $1.7 billion in fiscal 2011, fiscal 2012 fiscal 2013 and fiscal 2014, respectively. REASONS TO SELL Core Yoplait/Cereal Businesses are Challenging: General Mills yogurt sales declined in both fiscal 2014 and 2015 due to category headwinds emanating from significant dairy inflation. A decent performance by the Greek segment was overshadowed by weakness in the core/original Yoplait product line. Though the business showed some improvement in the first half of fiscal 2015, it remains to be seen if it can be sustained. Moreover, the cereals business is not doing too well due to weak category growth resulting from insufficient advertising by the cereal companies. The U.S. cereal category has been declining in the recent years. Lower demand for cereals due to competitive pressure from alternatives including yogurt, eggs, bread and peanut butter is hurting category growth. General Mills Cereals division declined 2% in fiscal 2013 but was flat in Though the division did slightly better in 2014 than in 2013, weak cereal category conditions make it difficult for the division to grow. While management is taking initiatives to reinvigorate these priority businesses through innovation and increased promotional support for new products, we believe they will take time to return to significant growth. High Commodity Inflation Impacting Margins: In 2014, the overall cost environment for food commodities was under pressure due to domestic and worldwide agricultural supply and demand imbalance and other macroeconomic factors. Commodity inflation has been largely constricting the company s margins. Commodity cost pressures are expected to continue in General Mills input cost inflation has averaged between 4% and 5% in the recent years. In fiscal 2013 and 2014, the company s input cost inflation was 4%, higher than expected, mainly due to rising dairy costs. It is expected to approximate 3% in fiscal Management expects inflation to average 4% to 5% per year. Challenging Macroeconomic Environment: The North American food industry has seen sluggish growth and slowdown in consumption over the last few quarters. The industry is experiencing changes in consumer preference (for example, toward products with less artificial sweeteners, sodium and saturated fat), changes in consumer dynamics (such as increased need for portable and on-the-go products), demographic shifts, and also a spending shift toward lower-priced products. Despite moderate improvement in economic growth, consumers are increasing their spending only modestly, as the surge in job growth in 2014 is yet to translate into significantly higher wages. High Equity Research GIS Page 5

6 interest rates, higher healthcare costs and still-tightened credit availability continue to hurt consumer discretionary spending in the U.S. In Europe, though some improvement has been noticed lately, the economic conditions are still quite challenged. Moreover, though emerging markets offer strong growth prospects, they are generally volatile. RECENT NEWS General Mills Beats Second-Quarter Earnings; Weak Demand Hurts Sales December 17, 2014 General Mills beat the Zacks Consensus Estimate for earnings in the second quarter of fiscal However, revenues missed the consensus mark as the company continues to battle weak demand in the U.S. and slowdown in some of the international markets Second-Quarter Earnings Second-quarter adjusted earnings per share of $0.80 beat the Zacks Consensus Estimate of $0.76 by 5.3% the first earnings beat after four back-to-back negative surprises. Earnings also beat management s guided range of $0.75 $0.77 issued last month. We believe that a shift in timing of expenses led to the earnings beat. Earnings, however, declined around 4% year over year as sales and margins remained weak. On a constant currency basis, earnings were flat. Adjusted earnings exclude restructuring costs as well as mark-to-market valuation effects. Weak Revenues and Margins Total revenue declined 3% year over year to $4.71 billion and missed the Zacks Consensus Estimate of $4.84 billion by 2.7%. In constant currency terms, sales declined 1% as U.S. sales continued to lag, while growth slowed in key emerging markets. General Mills, like other food companies, is battling weak global food industry trends. Price/mix added 1% to revenues, same as the last five quarters. Volumes declined 2%, same as the last quarter. Foreign exchange dragged revenues by 2%. Adjusted gross margin declined 80 basis points (bps) to 34.9% due to lower sales, higher supply chain costs and unfavorable product mix. Advertising costs declined 9%. Despite lower advertising costs, adjusted operating margin declined 40 bps to 17% due to lower sales and gross margins. However, we note that both gross and operating margins improved from the previous quarter. The adjusted effective tax rate was 33.5%, compared with 33.2% last year. Equity Research GIS Page 6

7 Segment Performance U.S. Retail: Revenues from the U.S. Retail segment declined 4% year over year to $2.86 billion due to decline in both price/mix and volumes. Price/mix declined 1% and volumes went down 3% due to weak food industry trends. Sales growth in the Snacks (2%) and Yogurt (1%) divisions was offset by declines in the Cereal (5%), Baking Products (5%) and Meals (7%) segments. Yoplait yogurt business has done well in the first half driven by volume growth and market share gains after witnessing sales decline in both fiscal 2013 and However, the core cereals business continues to underperform due to weak category growth. Lower demand for cereals due to competitive pressures from alternatives including yogurt, eggs, bread and peanut butter are hurting category growth. Despite lower advertising costs, segment operating profit declined 10% to $616 million due to lower volume and higher supply chain costs. Sales and profits in the U.S. Retail segment were below expectations in the first half of 2015 as a result of weak food industry trends. Management aims to improve the segment s performance in the second half through strong new products, renovation of existing brands and better execution of marketing and customer programs. Management s three priorities for the second half include increased investment in cereal to foster growth, making a turnaround in the U.S. yogurt business and driving profits at the betterfor-you snacks business. International: Revenues in the International segment declined 6% year over year to $1.32 billion because of currency headwinds. Foreign exchange had an unfavorable impact of 9% on net sales. On a constant currency basis, international sales rose 3% driven largely by price/mix gains. While price/mix added 3% to net sales growth, volumes remained flat. Constant currency sales grew 14% in Latin America as inflation driven gains in Argentina and Venezuela offset a soft performance in Brazil. Constant currency sales grew 2% in Asia-Pacific as double-digit growth in both the Middle East and Korea was partially offset by lower Haagen-Dazs sales in greater China. Constant currency sales grew 4% in Europe led by strong innovation on Old El Paso. However, sales declined 7% in Canada due to business disruption. Segment operating profit declined 2% on a constant currency basis to $134 million due to lower revenues, mainly in emerging markets. Convenience Stores and Foodservice: On a year-over-year basis, the Convenience Stores and Foodservice segment s quarterly revenues improved 4% to $530 million led by yogurt, frozen breakfast, cereals and snacks. Volumes declined 1%, while price/mix increased 5%. Segment operating profit rose 13% year over year to $96 million led by favorable product and channel mix. Equity Research GIS Page 7

8 Joint Venture Earnings Constant currency net sales grew 5% for HDJ driven by strong performance if core mini cups, multipacks and seasonal items. Revenues were down 3% for CPW as sales increase in Brazil, Chile and Southeast Asia was offset by category weakness in Western Europe. Combined after-tax earnings from the joint ventures were $27 million, up 4% from the year-ago level, primarily due to higher sales for HDJ. Financial Details Cash flow from operation was $863 billion in the first half of fiscal 2015 down from the year-ago period. In the first half, capital expenditures were $318 million, while the company paid dividends of $503 million and repurchased shares worth $969 million. Fiscal 2015 Outlook Retained Management retained the previously provided fiscal 2015 outlook, while pointing out that operating condition in the U.S. markets is becoming more challenging. Management had slashed it revenue, operating profit and earnings per share guidance in November last year in response to continued weak food-industry trends in the U.S. and slowing growth in the key emerging markets. Fiscal 2015 net sales are expected to increase at a low single-digit rate in constant currency, including the impact of the 53 rd week and the buyout of Annie s Inc. The 53 rd week is expected to add 2% to sales growth, while the Annie s acquisition is expected to add $120 million. Adjusted operating profit (constant currency) is expected to decline at a low single-digit rate. Adjusted earnings per share (constant currency) are expected to grow at a low single-digit rate. Currency headwinds are expected to hurt earnings by $0.05. Annie's acquisition is expected to add roughly $120 million in net sales and $0.01 of earnings per share in fiscal As previously indicated, General Mills expects to exceed the targeted $400 million of HMM supply chain savings in fiscal In addition, General Mills is undertaking Project Century which includes streamlining the North American manufacturing and distribution operations targeting possible reduction in capacity and overhead costs. In addition, the company is making efforts to further reduce overhead costs which, coupled with Project Century, are expected to generate cost savings of $40 million in the second half of fiscal 2015, within $260 to $280 million in fiscal 2016 and more than $350 million in fiscal Commodity cost inflation is expected to be 3% in fiscal Interest expense will be up in high singledigits in fiscal Equity Research GIS Page 8

9 Second-Half Outlook Second-half results are expected to be better than the first as management expects U.S. retail and earnings performance to improve. Moreover, easy comparison with the year-ago comparable period, incremental cost savings and decline in commodity costs should lead to better profits. Milk costs have declined after the third quarter. Net sales in the second half are expected to grow at a mid single-digit rate in constant currency. Constant currency adjusted operating profit is expected to grow at a high single-digit. Constant currency adjusted diluted EPS is expected to grow at a double-digit rate. Equity Research GIS Page 9

10 VALUATION General Mills current trailing 12-month earnings multiple is 20.3x, representing a discount of 11% to the industry average of 22.8x. Over the last five years, General Mills shares have traded in the range of 14.8x to 19.8x trailing 12-month earnings. Based on 2015 earnings estimate of $2.84, the stock is trading at 19.3x, representing a discount of 31.8% to the industry average of 28.3x. At the end of the second quarter of fiscal 2015, the P/B multiple of the stock was approximately 6.0x, a premium of around 58.0% to the industry average of 3.8x. Overall, the stock is attractive on an ROE basis given a trailing 12-month ROE of 25.4% against a negative return for the industry. We have a long-term Neutral recommendation on the stock. Our target price of $58.00 is based on approximately 20.4x our 2015 earnings estimate. On a P/B basis, the price target is based on a P/B multiple of approximately 6.3x. Key Indicators P/E F1 P/E F2 Est. 5-Yr EPS Gr% P/CF (TTM) P/E (TTM) P/E 5-Yr High (TTM) P/E 5-Yr Low (TTM) General Mills, Inc. (GIS) Industry Average S&P San Miguel Corporation (SMGBY) Kraft Foods Group, Inc. (KRFT) SUPERVALU, Inc (SVU) N/A 2.3 ConAgra Foods, Inc. (CAG) TTM is trailing 12 months; F1 is 2015 and F2 is 2016, CF is operating cash flow P/B Last Qtr. P/B 5-Yr High P/B 5-Yr Low ROE (TTM) D/E Last Qtr. Div Yield Last Qtr. EV/EBITDA (TTM) GENL MILLS (GIS) Industry Average S&P Equity Research GIS Page 10

11 Earnings Surprise and Estimate Revision History Equity Research GIS Page 11

12 DISCLOSURES & DEFINITIONS The analysts contributing to this report do not hold any shares of GIS. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Outperform- Zacks expects that the subject company will outperform the broader U.S. equity market over the next six to twelve months. Neutral- Zacks expects that the company will perform in line with the broader U.S. equity market over the next six to twelve months. Underperform- Zacks expects the company will under perform the broader U.S. Equity market over the next six to twelve months. The current distribution of Zacks Ratings is as follows on the 1114 companies covered: Outperform %, Neutral %, Underperform 6.0%. Data is as of midnight on the business day immediately prior to this publication. Our recommendation for each stock is closely linked to the Zacks Rank, which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. In determining Risk Level, we rely on a proprietary quantitative model that divides the entire universe of stocks into five groups, based on each stock s historical price volatility. The first group has stocks with the lowest values and are deemed Low Risk, while the 5 th group has the highest values and are designated High Risk. Designations of Below-Average Risk, Average Risk, and Above-Average Risk correspond to the second, third, and fourth groups of stocks, respectively. Analyst Last Updated by Copy Editor Content Editor Lead Analyst QCA Reason for Update Kinjel Shah Kinjel Shah Kamalika Pramanik Kinjel Shah Kinjel Shah Q215 Earnings Equity Research GIS Page 12