Low-carbohydrate diets aren't starving General Mills (NYSE:GIS). The company admits that spiking egg sales are probably at the expense of cereals, but also notes that sales of Totino's Pizza and Hamburger Helper are extremely strong. The company continues to project 11% earnings growth for each of the next three years -- and a total reduction of $2 billion in debt.

Yesterday, General Mills reported uneven results. Cereals, where Kellogg's (NYSE:K) is enjoying 11% growth, were down 2% for the most recent quarter. Second-tier cereal lines were the primary culprits. Pillsbury, purchased for $10.2 billion in 2001, turned in flat sales.

The real growth was in meals (5%), snacks (+6%), and Yoplait Yogurt (+9%). Progresso Soups saw a 22% increase in shipments, eating into Campbell's (NYSE:CPB) market share. Progresso, like its TV ads say, is producing meaty results.

The company also lowered guidance modestly for the fiscal year, citing higher commodity prices -- especially wheat, energy, eggs and vanilla -- and lower shipment volumes. Earnings, though, are still expected to increase a healthy 13% to 17% from 2003's $2.43 a share.

Even though the company cannot confirm a direct impact from diet fads, and notes (correctly) that such things come and go, management spent a good part of the webcast talking about weight management. The company cited favorable weight study results for people who breakfast with cereals and said this about a new product: "Yoplait Light is the only light yogurt clinically shown to help you burn more fat and lose more weight than just cutting calories alone."

OK, but is General Mills good for investors? The company, with a relatively high 2.0 debt-to-equity ratio, is certainly not light on debt. Still, with operating margins increasing to 18.9%, its performance rivals that of peers Kraft Foods (NYSE:KFT) and ConAgra (NYSE:CAG), and the company isn't in jeopardy of skipping a debt payment -- to say nothing of the $450 million in debt reduction planned for this year.

Finally, there is the on-going SEC investigation of the company's sales practices and related accounting. Management has indicated that it is cooperating fully and does not know when the SEC will issue a statement. No doubt, this has something to do with why General Mills sells below the industry average of 20 times earnings.

Food is a necessity and the General Mills stable, boasting the likes of Green Giant, Old El Paso, and even leading organic food brands, will help it meet its long-term earnings goals. With debt reduction a clear part of the long-term plan, and double-digit earnings growth projected for the coming years, the company makes a compelling investment case.

The stock currently trades in the middle of its 52-week range and at a slim 16.7 times the low end of 2004 earnings guidance. Its healthy 2.4% dividend is safe, and its right-sized 40% payout ratio leaves open the possibility for dividend increases. Now, there's some food for thought.

W.D. Crotty was at the product introduction of Berry Burst Cheerios -- where David Cassidy (of Partridge Family fame) sang and then married a male Cheerio to a female strawberry. The marriage, although tacky, was a success. Berry Burst Cheerios have generated sales of $90 million after 11 months on the market.

Join W.D. on The Motley Fool's General Mills discussion board. For a 30-day free trial to the discussion boards, click here. You can e-mail W.D. at wdcrotty@fool.com.