GICS Sector : Consumer Defensive
Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company in North America.The company operates in four segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice.The Grocery & Snacks segment primarily offers shelf stable food products through various retail channels in the United States.
Conagra Brands reported organic net sales of $2.6 billion, a 0.6% decline versus the prior year. The adjusted gross margin was 24.4%, and the adjusted operating margin was 11.8%, both down versus the prior year but slightly better than initial expectations. Adjusted earnings per share (EPS) were $0.39, beating estimates of $0.33, and down $0.14 versus the year ago period.
Publication Date: Oct -27
The company's consumption performance improved meaningfully over Q4 fiscal 2025 levels, with 44% of its portfolio holding or gaining volume share. The frozen portfolio delivered solid progress, with volumes improving 3.2 points in Q1 compared to Q4 fiscal 2025. The snacking domain performed in line with expectations, with strong volume in strategic protein snacks categories.
Conagra Brands successfully completed its Chef Boyardee, Van de Camps, and Mrs. Paul's divestitures in Q1, using the proceeds to reduce net debt by more than $400 million. This move demonstrates the company's commitment to a balanced approach to capital allocation.
The company reaffirmed its fiscal 2026 guidance, expecting organic net sales growth of negative 1% to positive 1%, adjusted operating margin of approximately 11% to 11.5%, and adjusted EPS of $1.7 to $1.85. Analysts estimate next year's revenue growth at -3.7%, indicating a challenging environment ahead.
Conagra Brands' current valuation metrics include a P/E Ratio of 10.3, P/B Ratio of 0.98, and Dividend Yield of 7.65%. The Net Debt / EBITDA ratio stands at 3.97, indicating a manageable debt burden. With an ROE of 9.6% and ROIC of 5.85%, the company demonstrates a reasonable return on equity and invested capital. The dividend yield is attractive, and the free cash flow yield is 13.04%, suggesting a potential upside.
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Conagra Brands' Refrigerated & Frozen segment growth of 1.2% is driven by increasing demand for convenient, healthy, and affordable meal solutions. Strong brands like Marie Callender's and Healthy Choice, coupled with innovative product launches, contribute to the segment's growth. Additionally, the company's focus on e-commerce and digital marketing efforts help to expand its customer base and increase sales.
Conagra Brands' Grocery & Snacks segment growth of 0.8% is driven by increasing demand for convenient and affordable meal solutions, steady sales of iconic brands like Marie Callender's and Healthy Choice, and strategic pricing initiatives. Additionally, the company's focus on innovation, such as the launch of new products and flavors, contributes to the segment's modest growth.
Conagra Brands' Foodservice segment growth of 1.5% is driven by increasing demand for convenient and portable meals, expansion of distribution channels, and strategic partnerships with foodservice providers. Additionally, the company's focus on innovation, renovation, and premiumization of its product portfolio, such as Marie Callender's and Healthy Choice, contributes to the growth.
Conagra Brands' International segment growth of 0.9% is driven by increasing demand for frozen meals and snacks in emerging markets, particularly in Latin America and Asia. Additionally, the company's strategic acquisitions and partnerships have expanded its global footprint, contributing to modest growth.
Frozen meals and desserts
Frozen meals and desserts
Frozen meals and soups
Gourmet popcorn kernels and microwave popcorn
Meat snacks and beef sticks
Canned pasta and Italian-inspired meals
Cooking sprays and oils
Canned fruit and puddings
Canned Asian-style meals and ingredients
Mexican-inspired frozen meals and snacks
Conagra Brands, Inc. operates in the packaged food industry, where substitutes are readily available. However, the company's strong brand portfolio and product offerings mitigate the threat of substitutes to some extent.
Conagra Brands, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand presence and product offerings give it an upper hand in negotiations with customers.
Conagra Brands, Inc. relies on a network of suppliers for raw materials and ingredients. While the company has some bargaining power due to its scale, suppliers also have some leverage due to the importance of their inputs in the production process.
The packaged food industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and gives Conagra Brands, Inc. a competitive advantage.
The packaged food industry is highly competitive, with many established players vying for market share. Conagra Brands, Inc. faces intense competition from rivals such as General Mills, Kellogg, and PepsiCo, which puts pressure on prices and margins.
| Value | |
|---|---|
| Debt Weight | 51.20% |
| Debt Cost | 5.80% |
| Equity Weight | 48.80% |
| Equity Cost | 5.80% |
| WACC | 5.80% |
| Leverage | 104.90% |
Value: 7.6
Growth: 7.3
Quality: 6.9
Yield: 8.0
Momentum: 3.0
Volatility: 7.7
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Value: 7.9
Growth: 4.6
Quality: 4.8
Yield: 9.0
Momentum: 0.5
Volatility: 9.0
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Value: 7.2
Growth: 4.7
Quality: 4.9
Yield: 9.0
Momentum: 0.5
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Value: 6.6
Growth: 7.6
Quality: 4.0
Yield: 0.0
Momentum: 3.5
Volatility: 9.7
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Value: 5.9
Growth: 3.3
Quality: 4.7
Yield: 7.0
Momentum: 0.5
Volatility: 8.0
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Value: 7.4
Growth: 4.8
Quality: 5.0
Yield: 0.0
Momentum: 3.5
Volatility: 6.0
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