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 an actual EPS of $0.45, beating estimates of $0.436. Although the company lowered Ardent's expectations by $30 million, it reiterated its annual sales and operating margin outlook. The company's gross margin in Q3 is expected to be similar to Q2, while SG&A as a percentage of net sales will be higher due to increased A&P spending. With a current P/E Ratio of 124.92 and an EV/EBITDA of 8.48, the market seems to be pricing in a certain level of growth.
Publication Date: Dec -20
The company has seen some favorability in chicken inflation but expects increased costs in beef and pork. Tariff timing has also provided some favorability, although over 50% of its tariff exposure is on tinplate, where there has been no change to tariff levels. Conagra Brands has not seen shoppers waiting to buy more on promotion, unlike some other food companies, and has kept pricing steady in some categories to drive volume growth.
Conagra Brands expects good momentum in frozen and snacks, with a strong marketing plan in place. The company is also working on Project Catalyst, a reengineering of core business processes using technology to drive more efficiency and effectiveness. With a strong lineup of new products and a good balance of value and premium offerings, the company feels good about its innovation performance.
The company expects to claw its way back up to historical gross margin levels, driven by productivity, inflation relief, supply chain resiliency investments, and pricing actions. The company aims to achieve at least the same level of performance as the previous year, if not grow, during the seasonal period, which includes promotions and inventory builds.
Analysts estimate next year's revenue growth at -3.8%. Given the current valuation metrics, including a P/S Ratio of 0.6 and a Dividend Yield of 8.07%, the stock appears to be attractive. The company's focus on debt reduction and its history of M&A are also positive factors. However, the wide EPS outlook range and the impairment charge taken in the quarter due to a sustained decline in its stock price and market cap are concerns that need to be monitored.
CONAGRA BRANDS ANNOUNCES DETAILS OF 2026 CAGNY CONFERENCE PRESENTATION WEBCAST
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AE Wealth Management LLC Boosts Stake in Conagra Brands $CAG
Jan -30
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MOKAN Wealth Management Inc. Sells 2,137 Shares of Conagra Brands Inc (CAG)
Jan -26
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: 6.4
Growth: 4.4
Quality: 4.6
Yield: 9.0
Momentum: 5.5
Volatility: 9.0
1-Year Total Return ->
Value: 7.6
Growth: 7.3
Quality: 6.9
Yield: 8.0
Momentum: 1.0
Volatility: 8.0
1-Year Total Return ->
Value: 7.3
Growth: 4.7
Quality: 4.8
Yield: 9.0
Momentum: 0.0
Volatility: 9.0
1-Year Total Return ->
Value: 6.0
Growth: 3.3
Quality: 4.3
Yield: 7.0
Momentum: 6.0
Volatility: 8.0
1-Year Total Return ->
Value: 6.2
Growth: 4.9
Quality: 3.9
Yield: 0.0
Momentum: 3.5
Volatility: 9.0
1-Year Total Return ->
Value: 7.6
Growth: 5.1
Quality: 5.2
Yield: 0.0
Momentum: 2.0
Volatility: 6.0
1-Year Total Return ->