On Jun 8, 2016, Zacks Investment Research upgraded ConAgra Foods, Inc. (CAG Quick QuoteCAG - Free Report) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold). Going by the Zacks model, companies with a Zacks Rank #2 are likely to perform better than the broader market over the next quarters.

Why the Upside?

ConAgra is funding lucrative capital deployment programs with the proceeds from the successful divestiture of its Private Brand segment. This is expected to enhance its shareholders’ utility in the long run. Moreover, the proceeds from the spin off will be used to lower the company’s debt burden, thereby assisting it in balance sheet deleveraging. We also expect the company’s margins to improve over time supported by better price/mix, operational efficacy, favorable input prices and increased volumes. The company’s deliberate acquisitions are also anticipated to boost top line in the to-be-reported quarters.  

However, analysts remain cautious on the stock, which is clearly evident from the downward revision in the Zacks Consensus Estimate over the past 90 days. As a result, estimates for the stock fell roughly 11.1% to $2.08 per share for 2016 and 0.4% to $2.41 for 2017. The downward estimate revisions are based on anticipation of headwinds like stiff competition leading to market share loss or anticipation of input supply or price-related problems.

CONAGRA FOODS Price and Consensus

CONAGRA FOODS Price and Consensus | CONAGRA FOODS Quote

Other Stocks to Consider

Other well ranked stocks in the industry include B&G Foods Inc. (BGS Quick QuoteBGS - Free Report) , Lancaster Colony Corporation (LANC Quick QuoteLANC - Free Report) and Omega Protein Corporation . All the three stocks currently sport a Zacks Rank #1 (Strong Buy).

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