Conagra Brands, Inc. (CAG) , one of North America's leading branded food companies, currently trades at a forward 12-month price-to-earnings ratio of 9.68X. The figure is below the industry and the S&P 500’s average of 16.03X and 21.88X, respectively, highlighting CAG as a potentially undervalued stock. For investors, this presents an attractive opportunity, which is further underscored by CAG’s current Value Score of A.CAG Stock P/E PerformanceImage Source: Zacks Investment ResearchCAG’s shares have lost 9 ...

The Zacks Food-Miscellaneous industry is navigating a challenging macroeconomic environment, as inflation continues to strain consumer spending and accelerate the shift toward private-label food alternatives. At the same time, rising input costs and operational expenses are placing added pressure on profit margins across the sector.In response to these headwinds, food companies are implementing strategic initiatives focused on cost optimization, product innovation and portfolio expansion to include more hea ...

Conagra Brands (CAG) Conference Summary Company Overview - Conagra Brands is one of the largest packaged food companies in the US, with a diverse portfolio including frozen snacks and shelf-stable products, serving retail, food service, and international markets. Notable brands include Marie Callender's, Birds Eye, Healthy Choice, and Slim Jim [2][4]. Key Points and Arguments Portfolio Transformation - Over the past ten years, Conagra has transformed from a diversified global holding company to a branded pure play focused on North America. This involved modernizing existing brands, acquiring new businesses, and divesting underperforming assets [4][5]. - The current portfolio has a significant focus on organic net sales from retail, particularly in frozen and permissible snacking, which now constitutes about two-thirds of retail sales [5][6]. Consumer Trends and Market Environment - The company has observed a shift towards conservatism among consumers due to prolonged inflation and economic uncertainty. This trend affects all income groups, particularly lower-income consumers [9][10]. - The current environment is characterized by cautious spending, with consumers prioritizing value and quality in their purchases [10][11]. Promotional Strategy - Conagra has reduced promotional activities compared to pre-COVID levels, focusing on high-quality merchandising rather than deep discounting. This strategy aims to drive volume growth through quality products [12][14]. - The competitive landscape remains rational, with a collective industry focus on improving volume trends after experiencing declines [16][18]. Input Costs and Inflation - The company faces significant input cost pressures, particularly from tariffs on tinplate and aluminum, with a 25% tariff impacting costs. Mitigation strategies include negotiating with suppliers and exploring alternative sourcing [20][22]. - Inflation is projected at 4% for the fiscal year, up from an initial estimate of 3%. The company is actively managing costs and exploring pricing strategies to offset inflationary pressures [26][27][54]. Frozen and Snacking Segments - The frozen food segment is experiencing a return to volume growth, driven by consumer demand for convenience and quality. The company aims to educate consumers on the benefits of frozen foods, which are perceived as high-quality and cost-effective [33][35][38]. - In the snacking category, Conagra has focused on permissible snacking options, such as meat snacks and popcorn, which have shown strong growth despite broader industry softness. The company has expanded its portfolio to include various meat snack brands [39][41][46]. Future Outlook and Guidance - The company is optimistic about maintaining volume growth and improving margins, despite ongoing supply chain challenges and inflationary pressures. The focus remains on optimizing trade management and promotional investments [49][52][54]. - Conagra plans to provide further guidance for fiscal year 2026 in the upcoming earnings call, with expectations of navigating through current uncertainties [60][62]. Capital Allocation and Debt Management - Conagra emphasizes a balanced approach to capital allocation, prioritizing debt paydown while also considering investments in business modernization and strategic acquisitions. The recent divestiture of Chef Boyardee aligns with this strategy [67][72]. - The company has successfully reduced leverage and aims to continue generating free cash flow to support debt reduction and strategic growth initiatives [64][66]. Additional Important Insights - The company has experienced supply chain disruptions, particularly in its frozen vegetable and chicken businesses, but is on track to recover by the end of the first quarter of fiscal 2026 [75][78]. - Innovations, such as the Banquet Mega Chicken Filet, have driven demand and contributed to supply challenges, highlighting the importance of product development in meeting consumer needs [79][80].

Core Viewpoint - Conagra Brands, Inc. has published its 2024 Citizenship Report, emphasizing its commitment to positive impacts on employees, communities, and the environment through four focus areas: Good Food, Responsible Sourcing, Better Planet, and Stronger Communities [1][2]. Good Food - Conagra is focused on producing safe, delicious, and nutritious foods that cater to modern consumer needs, ensuring access to information for informed dietary choices [2][6]. Responsible Sourcing - The company emphasizes careful sourcing of ingredients and packaging, considering environmental and social impacts, and promoting circularity through regenerative agriculture and thoughtful packaging design [3][6]. Better Planet - Conagra is committed to responsible environmental practices, aiming to reduce energy use, manage water resources efficiently, and minimize waste [4][6]. Stronger Communities - The company aims to foster an inclusive culture, supporting employees' growth and addressing food insecurity through volunteerism, product donations, and financial contributions [5][6]. Key Achievements - 100% of Conagra's production facilities have achieved Global Food Safety Initiative (GFSI) certification [6]. - Over 71% of frozen meals and vegetable products, and 85% of plant-based offerings meet the Health Star Rating for "healthier" foods [6]. - Significant environmental initiatives include avoiding over 288,000 lbs. of nitrogen application through crop rotation and reducing water use by nearly 15% with drip irrigation [6]. - 90% of solid waste was diverted to beneficial uses, and over 24.5 million pounds of food were donated to Feeding America, equating to more than 20.5 million meals [6][7]. Financial Overview - Conagra Brands generated net sales exceeding $12 billion in fiscal 2024 [8].

I give a sell rating for Conagra Brands (NYSE: CAG ). While valuation is already at ~10x forward PE today, I see potential for further de-rating when CAG misses estimates. Specifically, I expect margins to see more headwinds dueI am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Technical ...

Core Viewpoint - Conagra Brands Inc. reported disappointing third-quarter earnings for 2024, missing revenue and earnings per share estimates, yet managed a slight stock gain amidst broader market declines [1][2][3] Financial Performance - Revenue for the quarter was $2.84 billion, slightly below the expected $2.92 billion, with earnings per share (EPS) at 51 cents, one cent below estimates [2] - Net sales declined by 6.3% year-over-year, with a projected full-year net sales decline of approximately 2% and adjusted EPS expected to drop from $2.67 to $2.35 [3][4] - Operating margin fell to 8.4%, a decrease of 712 basis points [4] Market Trends - Consumers are increasingly turning to private-label brands due to inflation, impacting Conagra's sales [3][10] - The company continues to hold a majority volume in the $6.4 billion single-serve meals category, with a 0.6% year-over-year volume increase in the last quarter [7] Product Development - Conagra plans to label select Health Choice frozen food lines as "GLP-1 friendly" starting January 2025, indicating a focus on health-conscious products [5][6] - The frozen foods category is outperforming the broader edible market, with three consecutive quarters of retail volume growth [7] Stock and Dividend Information - Conagra's stock is currently yielding 5.24% with an annual dividend of $1.40 and a payout ratio of 137.25% [11] - The stock is viewed as a potential safe haven during market uncertainty, supported by a forward P/E ratio of around 11x and a consensus price target of $28.20 [12]

Group 1: Investment Opportunities - Lamb Weston (NYSE: LW) and Conagra Brands (NYSE: CAG) are trading at value levels with historically high yields for investors in 2025 [1] - Both companies are at the low ends of their historical ranges and below broad market averages, presenting potential investment opportunities [1][10] - Lamb Weston is expected to outperform Conagra in early 2025, showing growth while Conagra faces challenges [2][3] Group 2: Financial Performance and Forecasts - Lamb Weston has a 12-month stock price forecast of $73.55, indicating a 23.61% upside from the current price of $59.50 [2] - Conagra's 12-month stock price forecast is $28.20, with a 5.57% upside from the current price of $26.71 [7] - Both companies are expected to revert to revenue growth in 2026 and maintain healthy compound annual growth rates (CAGRs) through 2030 [4] Group 3: Dividend and Buyback Strategies - Conagra offers a higher dividend yield of 5.3%, while Lamb Weston has a lower yield but a more aggressive buyback strategy [8] - Lamb Weston reduced its share count by 2% in the first nine months of the year, with expectations for continued buybacks [8] - Conagra pays out about 55% of its earnings in dividends, while Lamb Weston pays out 45% [8] Group 4: Market Sentiment and Institutional Activity - Analysts have noted deep value in consumer staples stocks, with institutional buying activity increasing in Q4 and Q1 2025 [10][11] - Both stocks are trading near long-term lows, suggesting they may have hit bottom and are poised for a rebound [12] - The market has overcorrected for both stocks, indicating potential for significant gains in 2025 [10][12]

Core Viewpoint - Consumer staples stocks, including Lamb Weston, Conagra, and Philip Morris, experienced significant gains despite a broader market decline, highlighting their defensive nature in times of economic uncertainty [1][3]. Group 1: Company Performance - Lamb Weston reported 4% sales growth and earnings-per-share growth of just under 2% to $1.03, exceeding analyst expectations, and reaffirmed its full-year outlook [5][4]. - Conagra's sales fell 6.3% in its fiscal third quarter, with adjusted earnings per share down 23.1% to $0.51, yet management reiterated its full-year 2025 outlook of 2% sales declines and EPS of $2.35 [6][4]. - Philip Morris is perceived as recession-proof due to the addictive nature of its products and offers a 3.5% dividend yield, appealing to investors seeking stability [8]. Group 2: Market Context - The S&P 500 index fell 4.8% following tariff announcements, prompting investors to shift from economically sensitive stocks to defensive consumer staples [1][3]. - The consumer staples sector is characterized by limited growth but provides value in diversified portfolios, especially during recessions, as demand for essential products remains stable [9][10]. Group 3: Investor Sentiment - The rally in consumer staples stocks reflects investor confidence in their resilience amid economic challenges, as these companies typically maintain steady dividends [9][10]. - The market's reaction indicates a preference for safer investments, particularly for older investors or those nearing retirement [10].

Financial Performance - Net sales for the thirteen weeks ended February 23, 2025, were $2,841.0 million, a decrease of 6.3% compared to $3,032.9 million for the same period in 2024[8]. - Net income for the thirty-nine weeks ended February 23, 2025, was $896.5 million, down 2.9% from $914.9 million for the same period in 2024[8]. - Earnings per share (EPS) for the thirteen weeks ended February 23, 2025, were $0.30, a decline of 53.1% compared to $0.64 for the same period in 2024[8]. - Comprehensive income attributable to Conagra Brands, Inc. for the thirty-nine weeks ended February 23, 2025, was $889.0 million, compared to $915.1 million for the same period in 2024[11]. - Net income for the thirty-nine weeks ended February 23, 2025, was $896.5 million, down from $914.9 million for the same period in the previous year, representing a decrease of about 2.6%[16]. - Net income attributable to Conagra Brands, Inc. for the thirty-nine weeks ended February 23, 2025, was $466.8 million, compared to $284.5 million for the same period in the previous year, representing a year-over-year increase of 64%[87]. - The company reported a net income of $145.1 million for the thirteen weeks ended February 23, 2025, compared to $308.8 million in the same period last year, reflecting a decrease of 53.0%[106]. - Diluted earnings per share for Q3 fiscal 2025 was $0.30, down from $0.64 in Q3 fiscal 2024, reflecting lower net income[116]. Expenses and Costs - Selling, general and administrative expenses increased to $443.7 million for the thirteen weeks ended February 23, 2025, up 14.5% from $387.4 million in the same period in 2024[8]. - The cost of goods sold for the thirty-nine weeks ended February 23, 2025, was $6,534.7 million, a decrease of 1.2% from $6,616.5 million in the same period in 2024[8]. - Interest expense, net, for the thirty-nine weeks ended February 23, 2025, was $314.9 million, down from $325.8 million for the same period in 2024[8]. - The company recognized an impairment charge of $27.2 million in the Refrigerated & Frozen segment during Q3 fiscal 2025[97]. - The company incurred asset impairment charges of $121.3 million during the period, compared to $50.9 million in the previous year[16]. Assets and Liabilities - Total current assets decreased from $3,149.5 million to $2,965.6 million, a decline of approximately 5.8%[13]. - Total liabilities decreased from $12,351.0 million to $11,965.4 million, a reduction of about 3.1%[13]. - Cash and cash equivalents at the end of the period decreased to $49.4 million from $77.7 million, a decline of approximately 36.4%[16]. - Current liabilities increased to $4,303.7 million as of February 23, 2025, compared to $3,241.8 million as of May 26, 2024, an increase of 33.0%[13]. - Goodwill increased from $10,325.9 million as of May 26, 2024, to $10,499.8 million as of February 23, 2025, reflecting an acquisition of $176.2 million and a currency translation adjustment of $(2.3) million[51]. Acquisitions and Divestitures - The company acquired Sweetwood Smoke & Co. for $179.4 million, with $129.9 million classified as goodwill[24]. - The company completed the sale of its 51.8% ownership stake in Agro Tech Foods Limited for net proceeds of $76.8 million, recognizing a loss of $2.3 million on the sale[27]. - The company recognized a loss on divestitures of $27.2 million for the thirteen weeks ended February 23, 2025, compared to no loss in the same period in 2024[8]. Restructuring and Plans - The Conagra Restructuring Plan has incurred cumulative charges of $310.2 million, with $90.7 million recognized in the first three quarters of fiscal 2025[34]. - The company has approved a total of $345.9 million for the Conagra Restructuring Plan, with $90.1 million in cash charges and $255.8 million in non-cash charges recognized[34]. - The company initiated plans to sell businesses within its Grocery & Snacks, Refrigerated & Frozen, and International segments, recognizing an impairment charge of $27.2 million in the third quarter of fiscal 2025[30]. Cash Flow and Financing - The company reported net cash flows from operating activities of $1,346.2 million, compared to $1,531.3 million in the prior year, a decrease of approximately 12.1%[16]. - Cash used in investing activities amounted to $457.2 million in the first three quarters of fiscal 2025, compared to $295.6 million in the same period of fiscal 2024[165]. - Cash used in financing activities was $914.3 million in the first three quarters of fiscal 2025, down from $1.25 billion in fiscal 2024, reflecting long-term debt repayments of $274.8 million and cash dividends paid of $502.2 million[166]. - The company repaid $1.0 billion of its 4.30% senior notes on May 1, 2024, funded by an unsecured term loan and commercial paper[37]. Market and Economic Conditions - The company anticipates ongoing challenges related to inflation, supply chain issues, and changing consumer preferences impacting future performance[111]. - The company anticipates continued economic pressures on consumers, including high inflation and potential tariff increases, which may affect volumes[118].

Core Insights - Conagra Brands, Inc. (CAG) reported third-quarter fiscal 2025 results with both net sales and earnings missing the Zacks Consensus Estimate, showing year-over-year declines in both metrics [1][2][3] Financial Performance - Adjusted earnings per share (EPS) were 51 cents, missing the estimate of 52 cents, and reflecting a 26.1% year-over-year decline due to reduced adjusted gross profit [3] - Net sales totaled $2,841 million, down 6.3% year over year, and also missing the consensus estimate of $2,889 million, attributed to a decrease in organic net sales, adverse currency movements, and M&A impacts [4][5] - Organic net sales decreased by 5.2% year over year, driven by a 2.1% negative impact from price/mix and a 3.1% decline in volume [5] - Adjusted gross profit fell 19.1% year over year to $704 million, with adjusted gross margin contracting by 389 basis points to 24.8% [6] Segment Performance - Grocery & Snacks segment reported net sales of $1,245.4 million, down 3.2% year over year, with organic sales declining 3.9% [8] - Refrigerated & Frozen segment saw net sales decrease by 7.2% year over year to $1,115.6 million, impacted by supply constraints [9] - International segment's net sales dropped 17.6% year over year to $223.9 million, with M&A and currency effects negatively impacting sales [10] - Foodservice segment reported a 6.1% decline in sales to $256.1 million, with organic sales falling 6.3% [11] Financial Health - At the end of the quarter, the company had cash and cash equivalents of $49.4 million, long-term debt of $6,236.8 million, and total stockholders' equity of $8,779.1 million [13] - Conagra generated $1,346.2 million in net cash flows from operating activities in the first three quarters of fiscal 2025, with capital expenditures of $304.2 million [13] Future Outlook - For fiscal 2025, Conagra expects a 2% decline in organic net sales growth, with an adjusted operating margin projected at 14.4% and adjusted earnings forecasted at $2.35 per share, down from $2.67 in fiscal 2024 [14]