Back to top

Should You Add Conagra (CAG) to Your Portfolio Right Now?

Read MoreHide Full Article

Adding Conagra Brands, Inc. (CAG - Free Report) to your portfolio will be a promising investment move, at the moment. In the last 60 days, the company’s Zacks Consensus Estimate for earnings has moved up 4.6% to $2.05 and 5.5% to $2.31 for fiscal 2018 (ending May 2018) and fiscal 2019, respectively. This Zacks Rank #2 (Buy) stock is poised to grow on the back of brand modernizing moves, stronger innovation, buyouts, strategic divestments and lower tax rates.

Why the Stock is Performing Well?

Value-over-Volume Strategy: Conagra is currently following a unique value-over-volume strategy, through which it is prioritizing price/mix metric and margins, instead of volumes. In sync with this, the company ensures that its robust volume performance is driven by stronger innovation, as well as new merchandizing, distribution, and consumer trail-related investments, instead of price discounts.

Top-Line Prospects: Sturdy demand for premium brands like Healthy Choice, Marie Callender, Slim Jim, Duke's, Bigs and Frontera is expected to boost Conagra’s revenues in the quarters ahead.

Moreover, new investments planned to strengthen its frozen business and brand renovation initiatives undertaken to improve snacks business would likely aid in improving Conagra’s top-line results in the upcoming quarters.

Per our estimates, the company’s projected year-over-year sales growth is 1.7% for fiscal 2019.

Over the last three months, shares of the company have rallied 4.2%, as against the 9.2% loss recorded by the industry.

Inorganic Moves: Conagra intends to boost its competency by acquiring high-margin businesses and divesting the less-profitable ones. For instance, the strategic acquisition of Angie's Artisan Treats, LLC (completed in October 2017) and Sandwich Bros. (completed in February 2018) are likely continue driving revenues and profitability in the quarters ahead. On the other hand, Del Monte’s spin-off will likely be accomplished by the end of this month.

Improving Profitability: Conagra has pulled off a positive average earnings surprise of 6.73% over the last four quarters. The company’s adjusted earnings in third-quarter fiscal 2018 (ended February 2018) surpassed the Zacks Consensus Estimate by 8.9% and also exceeded the year-ago tally by 27.1%.

Going forward, Conagra intends to improve its bottom line on robust top-line growth, share repurchase activities, lower tax rates and by exiting low-margin businesses. Notably, the company anticipates to report earnings of 2.03-$2.05 per share for fiscal 2018, higher than the previously estimated range of $1.84-$1.89 per share.

Per our estimates, the company’s projected year-over-year earnings growth is 17.8% and 12.7%, for fiscal 2018 and fiscal 2019, respectively.

Shareholders’ Interest: Conagra is also highly committed toward its shareholders and tries to provide adequate returns to them through dividends and share buyback offers. During third-quarter fiscal 2018, the company repurchased roughly 8 million shares for $280 million. Additionally, the company is on track with its aim to buyback $1.1 billion shares in full-year fiscal 2018.

Other Stocks to Consider

Some other top-ranked stocks in the industry are listed below:

Medifast, Inc. (MED - Free Report) sports a Zacks Rank of 1 (Strong Buy). The company has pulled off a positive average earnings surprise of 16.76% over the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

B&G Foods, Inc. (BGS - Free Report) holds a Zacks Rank of 2. The company has pulled off a positive average earnings surprise of 0.68% over the trailing four quarters.

Lamb Weston Holdings Inc. (LW - Free Report) carries a Zacks Rank of 2. The company has pulled off a positive average earnings surprise of 8.97% during the same time frame.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Conagra Brands Inc. (CAG) - free report >>

B&G Foods, Inc. (BGS) - free report >>

MEDIFAST INC (MED) - free report >>

Lamb Weston Holdings Inc. (LW) - free report >>

More from Zacks Analyst Blog

You May Like