Back to top

Analyst Blog

We currently maintain our Neutral recommendation on ConAgra Foods Inc. (CAG - Analyst Report), a leading processed and packaged food company with brands in over 97% of North American households.

We believe things are working in ConAgra Foods’ favor as the company posted solid earnings surprise in the last four trailing quarters—average surprise being 11%. The recently concluded fiscal first quarter 2013 impressed all as adjusted earnings per share from continuing operations of 44 cents exceeded the year-ago earnings of 31 cents and surpassed the Zacks Consensus Estimate by 25.7%.      

Net sales grew 6.7% year over year to $3,312 million, based on improved pricing, moderating inflation and contribution from acquired businesses. Operating margins also improved in the quarter.

Remarkable fiscal first quarter 2013 results and expectations of higher earnings growth through contributions from acquired businesses, continued growth in Lamb Weston potato operations, and margin management made the company raise its fiscal 2013 guidance. Earnings per share growth are now expected to be within 10%-12% in fiscal 2013, as against 6%-8% expected earlier.

Also, quarterly dividend rate increase and expansion plans in Russellville, Arkansas have made the company an attractive stock to look out for. However, the image gets a bit blurry with the rising competitiveness in the food industry, especially from the private label suppliers and producers. This is anticipated to lay an impact on the company’s market share and sales.

Adding to the peril is the rising cost of various raw materials, such as wheat, corn, oats, soybeans, beef, pork and poultry used by the company. The prices of these raw materials are at an all time high and are predicted to induce a negative impact on profits for the company.

Considering all these, we prefer to remain on the sidelines for ConAgra Foods. The stock bears a Zacks #2 (Buy) Rank while its prime competitors HJ HEINZ CO. and Kraft Foods Inc. carry a Zacks #3 (Hold) Rank.

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

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
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%