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Conagra Brands (CAG)
NYSE:CAG
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Conagra Brands
(NYSE:CAG)66Neutral
Positive Factors
Financial Performance
Conagra Brands has a low valuation and solid free cash flow, aligning with current consumption trends toward higher protein and convenience.
Sales Growth
The sequential improvement in organic sales growth and volumes is a positive development for the company.
Negative Factors
Market Competition
Increasing competitive pressures and a focus on frozen products by a key peer will likely make Conagra Brands' recovery more challenging.
Operational Challenges
The path of improvement for Conagra Brands 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 (CAG) vs. S&P 500 (SPY)
Market Cap
$12.16B
Dividend Yield5.37%
Average Volume (3M)5.90M
Price to Earnings (P/E)24.9
Beta (1Y)0.15
Revenue Growth-2.00%
EPS Growth-50.02%
CountryUS
Employees18,500
SectorConsumer Defensive
Sector Strength73
IndustryConsumer Products - Foods
Share Statistics
EPS (TTM)1.02
Shares Outstanding477,320,470
10 Day Avg. Volume5,503,844
30 Day Avg. Volume5,896,487
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.04
Price to Cash Flow (P/CF)6.40
P/FCF Ratio6.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.38Price Target Upside7.50% Upside
Rating ConsensusHold
Number of Analyst Covering13
Conagra Brands Business Overview & Revenue Model
Company DescriptionConagra Brands, Inc. (CAG) is a leading American packaged foods company that operates in the consumer goods sector. The company specializes in the production, marketing, and distribution of a vast array of food products, spanning frozen, refrigerated, and shelf-stable categories. Conagra's extensive portfolio includes well-known brands such as Healthy Choice, Marie Callender's, Banquet, Hunt's, and Slim Jim, among others. The company primarily serves the retail and foodservice sectors, offering high-quality, convenient food solutions to consumers across North America.
How the Company Makes MoneyConagra 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. The balance sheet showcases a sound equity base and low leverage, reducing financial risk. 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.62
Positive
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.70
Positive
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.78
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 11.93B | 12.05B | 12.28B | 11.54B | 11.18B | 11.05B | Gross Profit |
| 3.27B | 3.33B | 3.26B | 2.84B | 3.18B | 3.07B | EBIT |
| 6.53B | 852.80M | 1.10B | 1.41B | 1.83B | 1.46B | EBITDA |
| 1.36B | 1.44B | 2.25B | 2.00B | 2.31B | 1.85B | Net Income Common Stockholders |
| 492.60M | 347.20M | 683.60M | 888.20M | 1.30B | 840.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 77.70M | 77.70M | 93.90M | 83.30M | 79.20M | 553.30M | Total Assets |
| 20.86B | 20.86B | 22.05B | 22.44B | 22.20B | 22.30B | Total Debt |
| 8.65B | 8.65B | 9.24B | 8.98B | 9.01B | 9.75B | Net Debt |
| 8.58B | 8.58B | 9.14B | 8.90B | 8.93B | 9.19B | Total Liabilities |
| 12.35B | 12.35B | 13.25B | 13.57B | 13.56B | 14.35B | Stockholders Equity |
| 8.44B | 8.44B | 8.81B | 8.86B | 8.63B | 7.95B |
| Cash Flow | Free Cash Flow | ||||
| 1.53B | 1.63B | 633.20M | 712.90M | 961.70M | 1.47B | Operating Cash Flow |
| 1.92B | 2.02B | 995.40M | 1.18B | 1.47B | 1.84B | Investing Cash Flow |
| -537.10M | -375.00M | -354.90M | -434.90M | -340.30M | -153.80M | Financing Cash Flow |
| -1.40B | -1.66B | -631.60M | -738.00M | -1.61B | -1.37B |
Conagra Brands Technical Analysis
Negative
25.47
Price Trends
25.79
Negative
26.84
Negative
28.09
Negative
Market Momentum
>-0.01
Negative
49.93
Neutral
71.84
Neutral
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 25.47 is above the 20-day moving average (MA) of 25.16, below the 50-day MA of 25.79, and below the 200-day MA of 28.09, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 49.93 is Neutral, neither overbought nor oversold. The STOCH value of 71.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CAG.
Conagra Brands Risk Analysis
Conagra Brands disclosed 35 risk factors in its most recent earnings report. Conagra Brands reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Conagra Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $28.43B | 21.22 | 35.58% | 2.73% | -16.16% | 41.01% | |
72 Outperform | $33.70B | 13.30 | 28.29% | 3.85% | -1.48% | 11.45% | |
70 Outperform | $12.02B | 21.96 | 14.94% | 3.63% | 6.34% | -30.58% | |
68 Neutral | $37.43B | 13.87 | 5.58% | 5.11% | -2.98% | -2.22% | |
66 Neutral | $12.16B | 24.89 | 5.60% | 5.37% | -2.00% | -50.02% | |
64 Neutral | $15.87B | 20.98 | 6.59% | 3.86% | -1.84% | -5.14% | |
63 Neutral | $20.85B | 13.27 | -10.88% | 7.48% | 1.13% | 11.50% |
* Consumer Defensive Sector Average
Performance Comparison
CAG
Conagra Brands
25.47
-0.92
-3.49%
CPB
Campbell Soup
40.33
-1.20
-2.89%
GIS
General Mills
61.14
-1.03
-1.66%
HRL
Hormel Foods
28.90
-3.91
-11.92%
K
Kellanova
82.36
30.54
58.93%
KHC
Kraft Heinz
30.98
-2.54
-7.58%
Conagra Brands Earnings Call Summary
Earnings Call Date: Dec 19, 2024 | % Change Since: -5.67% | Next Earnings Date: Apr 3, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong brand performance and alignment between shipments and consumption, driven by effective investment strategies in key segments like frozen and snacks. However, increased inflation and FX impacts led to revised financial expectations, affecting EPS and leverage targets. Overall, the sentiment reflects cautious optimism with challenges in managing inflationary pressures.Highlights
Positive Shipment and Consumption Alignment
Shipments increased by 1% while consumption rose by 0.6% for Q2, indicating closely aligned metrics with no Thanksgiving timing effect.
Strong Brand and Market Performance
Conagra Brands achieved industry-leading share performance, particularly in the frozen and snacks segments, with positive share trends over the last five quarters.
Effective Investment Strategy
Investments in innovation, advertising, and trade have been effective, with a focus on frozen and snacks leading to consistent top-line growth.
Successful Free Cash Flow Management
Free cash flow conversion is above 100% due to effective working capital management, particularly in inventory, and focus on organizational cash flow.
Lowlights
Increased Inflation and FX Impact
Incremental inflation and foreign exchange pressures contributed to EPS pressure and a revised leverage target of 3.4x due to lower profit forecasts.
Back Half EPS Pressure
EPS outlook was revised due to higher than expected inflation, particularly in protein and cocoa costs, affecting profit expectations.
Short-term Margin Compression
Operating margin expected to be lowest in Q3 due to increased trade investment and innovation-related expenses.
Company Guidance
During the Conagra Brands Q2 2025 earnings call, the executive team provided updated guidance, addressing several key metrics and factors impacting their financial outlook. They reported a 1% increase in shipments and a 0.6% rise in consumption for the quarter, with inventory levels remaining stable compared to the previous year. The company adjusted its full-year inflation forecast to nearly 4%, attributing the back half EPS pressure primarily to incremental inflation and foreign exchange impacts. Despite these challenges, Conagra maintained its leverage target of 3x by the end of fiscal 2026 and highlighted strong free cash flow performance, with a conversion rate exceeding 100% due to lower net income projections. The executives emphasized their strategic decision to continue investing in growth, particularly in their frozen and snack segments, leveraging consumer trends toward convenience and health-focused snacking solutions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.