Conagra Brands (CAG) AI Stock Analysis

• Market Cap: $12.50B
• Dividend Yield: 5.72%
• Average Volume (3M): 7.03M
• Price to Earnings (P/E): 38.3
• Beta (1Y): >-0.01
• Revenue Growth: -3.15%
• EPS Growth: -65.38%
• Country: US
• Employees: 18,500
• Sector: Consumer Defensive
• Sector Strength: 90
• Industry: Packaged Foods
• EPS (TTM): 0.51
• Shares Outstanding: 477,362,460
• 10 Day Avg. Volume: 8,361,380
• 30 Day Avg. Volume: 7,029,566
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.03
• Price to Cash Flow (P/CF): 6.30
• P/FCF Ratio: 6.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $27.00
• Price Target Upside: 10.43% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 13

Conagra Brands' overall stock score of 68 reflects a stable but challenged financial performance. The company's strong balance sheet and cash flow generation are significant positives. However, profitability and revenue growth issues, coupled with technical weakness and high P/E ratio, weigh on the score. The earnings call highlighted both operational strengths and external challenges, notably in supply chain and inflation, impacting future performance.

Positive Factors

Financial Performance

Management seems pleased with its consumption trends and supply which are helping to inform the significant improvement implied in the 4Q outlook.

Sales Growth

Sequential improvement in organic sales growth and importantly volumes which were +0.4% at an enterprise level for the first time in six quarters.

Valuation

CAG's valuation is attractive with its 5.2% dividend yield the highest in our food coverage.

Negative Factors

Competition and Costs

Conagra Brands faces headwinds from increasing competition, higher promotions, and rising input costs.

Operational Challenges

The path of improvement for CAG has been elongated with less visibility due to a second operational issue in six months.

Supply Chain Issues

Supply chain challenges have forced Conagra Brands to lower their FY25 financial outlook.

Conagra Brands Business Overview & Revenue Model

Company Description

Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company in North America. The company operates in four segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice. The Grocery & Snacks segment primarily offers shelf stable food products through various retail channels in the United States. The Refrigerated & Frozen segment provides temperature-controlled food products through various retail channels in the United States. The International segment offers food products in various temperature states through retail and foodservice channels outside of the United States. The Foodservice segment offers branded and customized food products, including meals, entrees, sauces, and various custom-manufactured culinary products packaged for restaurants and other foodservice establishments in the United States. The company sells its products under the Birds Eye, Duncan Hines, Healthy Choice, Marie Callender's, Reddi-wip, Slim Jim, Angie's BOOMCHICKAPOP, Duke's, Earth Balance, Gardein, and Frontera brands. The company was formerly known as ConAgra Foods, Inc. and changed its name to Conagra Brands, Inc. in November 2016. Conagra Brands, Inc. was founded in 1861 and is headquartered in Chicago, Illinois.

How the Company Makes Money

Conagra Brands generates revenue through the sale of its diverse range of food products to various retail channels, including grocery stores, supermarkets, mass merchants, and convenience stores, as well as through foodservice operations. The company's revenue model is centered around leveraging its strong brand portfolio and extensive distribution network to maximize sales across different product categories, such as meals, entrees, condiments, snacks, and desserts. Key revenue streams include direct sales to retailers and wholesalers, as well as partnerships with foodservice providers. Conagra also focuses on innovation and brand development to drive growth, while strategic acquisitions and marketing initiatives further bolster its financial performance.

Conagra Brands Financial Statement Overview

Summary

Conagra Brands exhibits a solid financial position with strong cash flow performance and a conservative balance sheet. While the income statement reflects stability, the company faces challenges in revenue growth and net profitability. Strong cash flow metrics highlight excellent liquidity and cash management, positioning the company well for future growth potential despite current sales growth hurdles.

Income Statement

The gross profit margin for Conagra Brands in the TTM is approximately 27.4%, which is consistent with industry standards, indicating stable cost management. However, the net profit margin is relatively low at 4.13%, suggesting higher operating costs or interest expenses affecting net profitability. The revenue growth rate shows a decline of 1.01% from the previous period, indicating challenges in sales expansion. The EBIT margin at 54.76% appears high due to an anomaly in reported EBIT figures, needing further investigation. EBITDA margin is 11.42%, reflecting moderate operational efficiency. Overall, the company's income statement shows stability but faces growth challenges.

Balance Sheet

Conagra Brands has a debt-to-equity ratio of 0.25, indicating a conservative leverage position, which reduces financial risk. The return on equity (ROE) stands at 5.6% for the TTM, which is moderate and suggests modest effectiveness in generating profits from shareholders' equity. The equity ratio is 41.88%, suggesting a solid equity base relative to total assets, enhancing financial stability. The balance sheet indicates a healthy financial structure with manageable debt levels.

Cash Flow

The free cash flow growth rate shows a significant increase of 140.89%, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 3.89, highlighting robust cash flow relative to reported income. The free cash flow to net income ratio is 3.1, underscoring the company's ability to convert income into cash effectively. Overall, Conagra Brands demonstrates strong cash flow management and liquidity, supporting future investments and obligations.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
11.74B	12.05B	12.28B	11.54B	11.18B	11.05B
	Gross Profit
3.10B	3.33B	3.26B	2.84B	3.18B	3.07B
	EBIT
248.50M	852.80M	1.08B	1.35B	1.78B	1.45B
	EBITDA
1.22B	1.45B	1.69B	1.94B	2.22B	1.85B
	Net Income Common Stockholders
329.10M	347.20M	683.60M	888.20M	1.30B	840.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
49.40M	77.70M	93.30M	83.30M	79.20M	553.30M
	Total Assets
20.74B	20.86B	22.05B	22.44B	22.20B	22.30B
	Total Debt
1.91B	8.61B	9.42B	9.18B	9.19B	9.95B
	Net Debt
1.86B	8.54B	9.33B	9.10B	9.11B	9.40B
	Total Liabilities
11.97B	12.35B	13.25B	13.57B	13.56B	14.35B
	Stockholders Equity
8.78B	8.44B	8.74B	8.79B	8.55B	7.88B
Cash Flow		Free Cash Flow
1.45B	1.63B	633.20M	712.90M	961.70M	1.47B
	Operating Cash Flow
1.83B	2.02B	995.40M	1.18B	1.47B	1.84B
	Investing Cash Flow
-536.60M	-375.00M	-354.90M	-434.90M	-340.30M	-153.80M
	Financing Cash Flow
-1.32B	-1.66B	-631.60M	-738.00M	-1.61B	-1.37B

Conagra Brands Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.45
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAG, the sentiment is Negative. The current price of 24.45 is below the 20-day moving average (MA) of 25.76, below the 50-day MA of 25.75, and below the 200-day MA of 27.65, indicating a bearish trend. The MACD of -0.28 indicates Positive momentum. The RSI at 37.91 is Neutral, neither overbought nor oversold. The STOCH value of 14.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CAG.

Conagra Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PPC	76 Outperform	$12.71B	11.72	28.70%	―	2.93%	237.51%
GIS	70 Outperform	$31.74B	12.73	27.37%	4.26%	-2.62%	4.27%
MKC	69 Neutral	$19.99B	25.59	14.73%	2.29%	0.40%	10.89%
CAG	68 Neutral	$12.50B	38.32	3.67%	5.72%	-3.15%	-65.38%
CPB	66 Neutral	$11.37B	21.97	13.43%	4.13%	9.15%	-31.94%
Sector *	64 Neutral	$9.18B	14.52	4.32%	185.59%	3.96%	5.53%
SJM	61 Neutral	$12.34B	22.22	-3.55%	3.73%	7.07%	-181.54%