Bad times for food giant ConAgra (CAG, Financial) ended with impressive first-quarter results that it recently announced. The company came up with better-than-expected earnings. ConAgra’s management is confident of posting even better results in the future, and to further attract investors, it has increased the dividend also. The stock also looks profitable with good liquidity and reasonable debt. It can also be a good long-term holding. Let us find out if ConAgra is worth your dollars?
Signs of a comeback
ConAgra stepped into the new fiscal year in a solid state. It saw a solid 18% increase in earnings as compared to the same quarter last year. The earnings posted by ConAgra also topped analysts’ estimates by $0.04 per share. However, the top line of the food giant remained flat with $3.7 billion. ConAgra posted EPS of $0.39 as compared to $0.37 per share in the same quarter last year. This also surpassed consensus estimates of $0.35 per share.
The new fiscal year came up with blossoms for ConAgra as the consumer foods strengthened which helped the food giant to gain market share. This was quite needed for the financial stability of the company as the stock was continually drowning in the previous quarter, which ended after the better-than-expected earnings report. ConAgra looks in shape to fetch better operational and financial stability in the coming days. Under this, the company is focusing on improving the underlying health of its private brands. ConAgra is looking for attaining better operational excellence which will help it to improve its margins.
Growth drivers
The company has many key points which can be a primary growth driver for it in the future. It is counting on The Café Streamer which is showing strong growth and the food giant is confident of progress in Healthy Choice. ConAgra is also working on Orville Redenbacher. It is making some changes in packaging, assortment and merchandising. The food giant is expecting these changes to come out positive in the future.
Moving ahead, ConAgra is also seeing great opportunities in the snack segment where Slim Jim is already performing outstandingly. With this the company is focusing on its core customers and communicating them in a way that resonates. Seeing the growing demands in the snacking segment, ConAgra is making certain innovations in its product portfolio to make it more attractive to customers. It is taking the advantage of this through new emulations in some of the fastest-growing snack areas, such as pretzel flats and pieces and a new bolder flavour of crackers.
In new products, ConAgra has just launched a new flavor platform for its LoftHouse cookies. This will allow the food giant to leverage its strength during the holidays.
Seeing this growth, ConAgra has modest projections for sales and profit growth. The company is seeing good synergies and operational excellence which are expected to add more value to its top line and bottom line growth. Despite these factors, ConAgra is also facing some headwinds on the international front. Lamb Weston is facing the impact of adverse food quality in China. In order to strengthen its position in China, ConAgra has also acquired Chinese potato processor. This move will help the company regain lost momentum.
In addition, Lamb Weston has recently expanded its Portland, Oregon, plant, which is expected to better serve the growing global demands. This will help the company move smoothly.
Conclusion
Let us have a look at some fundamentals of the stock which will further help you to make an investment decision. ConAgra is impressive with a yield of 3.00% which can attract many investors to the stock. In addition, ConAgra is reasonable with trailing P/E of 22.29 and its earnings are also improving at a decent rate with forward P/E of 13.97. All these factors indicate better financial stability in the future.
