Back to top

Analyst Blog

We currently maintained our Neutral recommendation on ConAgra Foods Inc. (CAG - Analyst Report), a world leader in providing branded and value added food services. Headquartered in Omaha, the company had approximately 26,100 employees as of fiscal 2012 end.

The line of acquisitions for the company seems to merge well with its operations, achieving laudable results. In November 2012, the company announced its plans to acquire Ralcorp Holdings Inc., which is the largest private label food company in the US. Management expects cost synergies of roughly $225 million once the acquired company is fully integrated.

A significant contribution is expected from CongAgra Foods’ Lamb Weston potato business considering the trend in the past. Along with this, the company maintained a strict control on operating costs, striving to keep high margins.

However, it shouldn’t be overlooked that the company operates in a highly competitive industry, where the customers are price-sensitive. This could lead to a reduction in the prices of products and services despite an increase in the total costs, thereby squeezing the margins.

ConAgra’s results in the second quarter of 2013 showed signs of improvement based on the increase in the potato business, moderate inflation and contribution from acquired businesses. The company exited the quarter with a strong balance sheet.

Revenue for the reported quarter increased 8.9% year over year to $3,735.5 million. However, it was outshined by an 8.1% increase in the total costs. Earnings per share were 44 cents for the quarter. Operating margin was recorded at 8.4% as against 7.7% during the year-earlier quarter.

The current Zacks Consensus Estimate for the third quarter is 55 cents, an increase of roughly 7.3% year over year. Estimates for 2013 and 2014 are $2.09 and $2.30, respectively. These represent annual increase of 13.6% in 2013 and 10.1% in 2014.

Currently, we maintain a Neutral recommendation on ConAgra Foods Inc. The stock also bears a Zacks #2 (Buy) Rank, while its prime competitors H J HEINZ CO. and BRF Basil Food (BRFS - Snapshot Report) carry a Zacks #3 (Hold) Rank.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

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 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
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
STRATTEC SE… STRT 80.24 +3.00%
PATTERSON-U… PTEN 34.54 +2.98%