Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On Jul 4, we reiterated our Neutral recommendation on the food products company, ConAgra Foods, Inc. (CAG - Analyst Report), based on its top- and bottom-line growth. However, we are cautious about ConAgra’s Commercial Foods segment, going forward.

Why the Reiteration?

ConAgra’s earnings in fourth quarter of fiscal 2013 were 60 cents, increasing 17.6% year over year. Revenues for the quarter jumped 33.7% year over year to $4.6 billion. The results reflect positive contribution from its acquired assets and strong performance of its Consumer Foods segment.

The Ralcorp acquisition, undertaken in January this year, has been a significant contributor to the revenues. Once the integration is complete, Ralcorp is expected to drive the synergies further. The cost synergies are expected to reach $300 million by fiscal 2017.

The Consumer Foods segment is expected to grow further in the quarters ahead, driving ConAgra’s business further. Moreover, ConAgra expects to use the proceeds from its new joint venture, Ardent Mills, to repay the debt incurred for the Ralcorp acquisition. The reduction in debt will improve the company’s leverage ratios, in turn enhancing shareholders’ value.

However, ConAgra’s Commercial Foods segment is not performing as was expected, pulling the growth in revenues down. The segment is likely to remain in doldrums in the coming quarters due to the loss of a major customer in the potato business.

Also, the product launches in the segments call for higher advertising expenses, increasing the overall expenses for the company. Rising prices of raw materials used by ConAgra also temper our outlook on the stock.

Other Stocks to Consider

ConAgra currently carries a Zacks Rank #3 (Hold). Other stocks worth a look in the industry are B&G Foods Inc. (BGS - Snapshot Report) and Flowers Foods, Inc. (FLO - Snapshot Report), both carrying a Zacks Rank #1 (Strong Buy). Another company, Campbell Soup Company (CPB - Analyst Report) carrying a Zacks Rank #2 (Buy), is worth a look.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%