Conagra Brands Inc CAG

Conagra’s November-ended fiscal second-quarter organic sales grew 2% versus our flat estimate, with the upside driven by a price/mix contribution of 6.8%. At-home food sales remain elevated from 2019, with Conagra’s two-year sales CAGR at 5.3%. While we believe the mix of away-from-home food consumption will revert to the 50% pre-pandemic level for most grocery categories, we are encouraged by the changes Conagra has made in its brand-building practices (a switch to data-driven consumer insights, and a shift of marketing dollars to more productive digital channels). These efforts have improved the relative performance of Conagra’s brands, with the firm reporting second-quarter market share gains of 41 basis points in the past two years, per IRI. That said, Conagra's under-investment relative to peers weakens our confidence in the firm’s ability to sustain strong brands, resulting in our no-moat rating.