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Conagra Brands Inc CAG

Morningstar Rating
$28.82 +0.32 (1.12%)
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Company Report

Early Signs of Headwinds Easing for Conagra, Which Should See Low-Single-Digit Sales Growth Return

Conagra’s business has evolved over the years, from a conglomerate, reinforced by its 2012 acquisition of Ralcorp that bolstered its private-label exposure (later divested at half the purchase price), to its present focus on brands and driving growth through increased value (rather than just boosting volume). However, food is competitive, and we don’t think it has a portfolio of leading brands and entrenched retailer relationships to warrant pricing power, a handicap relative to branded peers. In addition, it spends notably less in product development and marketing, claiming more efficient spending closes the gap. But we remain skeptical and don’t believe it will capitalize on consumer trends more effectively than competitors. A subscale portfolio lacking strong brands combined with continued underspending is likely to leave it an industry laggard, in our view.

Price vs Fair Value

CAG is trading at a 762% premium.
Price
$28.82
Fair Value
$37.00
Uncertainty
Medium
1-Star Price
$69.92
5-Star Price
$65.70
Economic Moat
Ltw
Capital Allocation
Sfmtmbsxq

Bulls Say, Bears Say

Bulls

Conagra’s premiumization of its product portfolio has led to growing price per unit, which could help drive higher margins than we expect.

Bears

Conagra invests less in marketing and innovation than its peers while competing in very competitive categories like frozen ready meals. It’ll be hard to keep up without enough investment.

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News

Trading Information

Previous Close Price
$28.50
Day Range
$28.5329.08
52-Week Range
$25.1634.66
Bid/Ask
$28.51 / $29.00
Market Cap
$13.78 Bil
Volume/Avg
6.2 Mil / 4.4 Mil

Key Statistics

Price/Earnings (Normalized)
10.75
Price/Sales
1.14
Dividend Yield (Trailing)
4.86%
Dividend Yield (Forward)
4.86%
Total Yield
4.86%

Company Profile

Conagra Brands is a packaged food company that operates predominantly in the United States (over 90% of revenue and profits). Most of its revenue comes from frozen food, including brands like Marie Callender’s, Healthy Choice, Banquet, and Birds Eye. Conagra also sells snacks, shelf-stable staples, and refrigerated food through brands like Duncan Hines, Hunt’s, Slim Jim, Vlasic, Orville Redenbacher's, Reddi-wip, Wish-Bone, and Chef Boyardee. The company primarily sells through the us retail channel, with just 8% of fiscal 2023 revenue coming from international markets and 9% from foodservice.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Value
Total Number of Employees

Competitors

Valuation

Metric
CAG
KHC
GIS
Price/Earnings (Normalized)
10.7511.0614.49
Price/Book Value
1.500.814.01
Price/Sales
1.141.531.95
Price/Cash Flow
7.478.4612.02
Price/Earnings
CAG
KHC
GIS

Financial Strength

Metric
CAG
KHC
GIS
Quick Ratio
0.290.510.33
Current Ratio
0.951.090.66
Interest Coverage
3.354.917.70
Quick Ratio
CAG
KHC
GIS

Profitability

Metric
CAG
KHC
GIS
Return on Assets (Normalized)
5.79%4.07%8.71%
Return on Equity (Normalized)
14.39%7.44%27.32%
Return on Invested Capital (Normalized)
8.83%6.23%13.78%
Return on Assets
CAG
KHC
GIS
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