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Conagra Brands (CAG)
:CAG
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Conagra Brands
(NYSE:CAG)
70Outperform
Positive Factors
Consumption Trends
Management seems pleased with its consumption trends and supply which are helping to inform the significant improvement implied in the 4Q outlook.
Valuation
CAG's valuation is attractive with its 5.2% dividend yield the highest in our food coverage.
Negative Factors
Competition
An increased focus on frozen by a key peer will likely make CAG’s recovery from these issues more challenging.
Operational Issues
The path of improvement for CAG has been elongated with less visibility due to a second operational issue in six months.
Supply Chain
The company is not out of the woods yet as it relates to its supply chain investments while the cost outlook remains uncertain.
Conagra Brands (CAG) vs. S&P 500 (SPY)
Market Cap
$12.74B
Dividend Yield5.25%
Average Volume (3M)6.61M
Price to Earnings (P/E)39.0
Beta (1Y)0.02
Revenue Growth-3.15%
EPS Growth-65.38%
CountryUS
Employees18,500
SectorConsumer Defensive
Sector Strength93
IndustryPackaged Foods
Share Statistics
EPS (TTM)0.68
Shares Outstanding477,362,460
10 Day Avg. Volume6,963,267
30 Day Avg. Volume6,611,554
Financial Highlights & Ratios
PEG RatioN/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 Ratio6.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.25Price Target Upside2.14% Upside
Rating ConsensusHold
Number of Analyst Covering13
Conagra Brands Business Overview & Revenue Model
Company DescriptionConagra 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 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. 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 | ||||
| 11.74B | 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
Positive
26.68
Price Trends
25.74
Positive
26.26
Positive
27.80
Negative
Market Momentum
0.18
Negative
57.23
Neutral
79.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAG, the sentiment is Positive. The current price of 26.68 is above the 20-day moving average (MA) of 26.22, above the 50-day MA of 25.74, and below the 200-day MA of 27.80, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 57.23 is Neutral, neither overbought nor oversold. The STOCH value of 79.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $11.85B | 10.94 | 28.70% | ― | 2.93% | 237.51% | |
74 Outperform | $20.51B | 26.25 | 14.73% | 2.24% | 0.40% | 10.89% | |
70 Outperform | $12.74B | 39.04 | 3.67% | 5.25% | -3.15% | -65.38% | |
66 Neutral | $32.64B | 13.09 | 27.37% | 4.01% | -2.62% | 4.27% | |
66 Neutral | $11.87B | 22.94 | 13.43% | 3.87% | 9.15% | -31.94% | |
62 Neutral | $20.22B | 14.00 | -15.99% | 3.22% | 1.17% | 3.32% | |
61 Neutral | $12.25B | 22.22 | -3.55% | 3.73% | 7.07% | -181.54% |
* Consumer Defensive Sector Average
Performance Comparison
CAG
Conagra Brands
26.68
-3.12
-10.47%
CPB
Campbell Soup
38.79
-3.42
-8.10%
GIS
General Mills
59.61
-7.89
-11.69%
SJM
JM Smucker
115.16
3.60
3.23%
MKC
McCormick & Company
76.46
2.11
2.84%
PPC
Pilgrim's Pride
49.97
18.74
60.01%
Conagra Brands Earnings Call Summary
Earnings Call Date: Apr 3, 2025 | % Change Since: 1.14% | Next Earnings Date: Jul 10, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. The company demonstrated strong cash flow and successful debt repayment, along with positive growth in the snacking segment. However, challenges such as ongoing supply chain constraints, persistent inflation, and potential consumption weakness due to inventory levels were highlighted. Although there is strong consumer demand, external factors pose risks to cost structures.Highlights
Strong Cash Flow and Debt Repayment
Free cash flow conversion was at 125%, with half a billion dollars of debt paid down in the last twelve months.
Snacking Segment Growth
Snack volumes were up 4% in Q3, driven by strong performance in protein and fiber-rich snacks like meat snacks and popcorn.
Strong Consumer Pull for Products
Overall consumer pull remains strong, with continued growth in frozen foods and healthy snacking categories.
Modernization Efforts
Ongoing multiyear effort to modernize the supply chain, including significant investments in maintenance capital.
Lowlights
Supply Chain Constraints
Continued supply chain constraints led to negative absorption impacts and additional costs from third-party commands.
Inflation Pressure
Inflation remains at 4%, with external factors such as tariffs potentially causing further cost increases.
Consumption Weakness Due to Inventory Levels
Consumption may weaken due to limited inventories, despite strong underlying consumer pull.
Channel Challenges in Convenience Stores
Convenience stores are experiencing weaker performance, impacting the overall grocery and snack segment.
Company Guidance
During the Conagra Brands third quarter fiscal 2025 earnings call, guidance was provided for the remainder of the fiscal year and touched upon expectations for fiscal 2026. Key metrics included a strong free cash flow conversion of 125% and the repayment of half a billion dollars of debt over the last twelve months. Conagra also highlighted a 4% productivity target and anticipated that inflation would remain a wildcard. The company expects improvements in gross margins and shipment volumes in Q4, despite persistent supply chain challenges. Dave Marberger, CFO, mentioned the priority of using cash flow to continue paying down debt and achieving a leverage target of three times by the end of the next fiscal year. Additionally, Conagra plans to address ongoing supply and inventory issues, with measures already in place to improve service levels, and expects no repeat of the supply constraints experienced in the second half of the current fiscal year. The call also noted that the company had adjusted its CapEx guidance for the year by $40 million due to timing but expected it to return to normal levels next year.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.