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Conagra Brands (CAG)
NYSE:CAG

Conagra Brands (CAG) AI Stock Analysis

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Conagra Brands

(NYSE:CAG)

Rating:68Neutral
Price Target:
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
Debt Management
CAG announced an agreement to sell Chef Boyardee for $600 million, which will be used to pay down debt.
Dividend Yield
CAG's valuation is attractive with its 5.2% dividend yield the highest in our food coverage.
Sales Growth
Planned investments to stimulate demand is broadly gaining traction, especially in grocery/snacks and refrigerated/frozen segments.
Negative Factors
Competitive Pressure
Increasing competitive pressures and a focus on frozen products by a key peer will likely make Conagra Brands' recovery more challenging.
Earnings Impact
The sale of Chef Boyardee is expected to be approximately 4% dilutive to EPS.
Supply Chain Challenges
Supply chain challenges have forced Conagra Brands to lower their FY25 financial outlook.

Conagra Brands (CAG) vs. SPDR S&P 500 ETF (SPY)

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 primarily through the sale of its diverse range of packaged food products to retailers, foodservice operators, and industrial customers. The company's key revenue streams are its branded consumer products, sold through grocery stores, supermarkets, and e-commerce platforms, and its commercial food products, supplied to restaurants and other foodservice establishments. Conagra leverages significant economies of scale in manufacturing and distribution to maintain competitive pricing and profitability. Additionally, strategic partnerships and acquisitions play a crucial role in expanding Conagra's brand portfolio and market reach, driving sales growth and enhancing its ability to innovate in response to consumer trends.

Conagra Brands Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Shows how much each business segment contributes to total sales, indicating the company’s diverse revenue streams and potential areas for growth or risk.
Chart InsightsConagra Brands' Grocery and Snacks segment faces challenges with convenience store performance impacting growth, despite strong consumer demand. The Refrigerator and Frozen segment shows resilience with consistent demand for frozen foods. International revenue is declining, highlighting potential risks in global markets. The Foodservice segment's growth is steady but faces supply chain constraints. The earnings call underscores strong cash flow and debt repayment, yet persistent inflation and supply issues could pressure margins. Strategic focus on modernizing the supply chain and addressing inventory levels aims to stabilize operations and support future growth.
Data provided by:Main Street Data

Conagra Brands Financial Statement Overview

Summary
Conagra Brands shows a mixed financial performance. The balance sheet is strong with low leverage and solid equity financing. However, there are challenges in profitability and revenue growth, as seen in declining margins and inconsistent revenue trends. Cash flow generation remains robust, supporting overall financial health. Attention to operational efficiencies and cost management is crucial for improving profitability and sustaining growth.
Income Statement
72
Positive
Conagra Brands shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 26.4%, indicating a stable ability to generate profit from sales. However, the net profit margin has decreased to 2.8% from 5.5% in 2022, raising concerns about cost control and profitability. Revenue growth has been inconsistent, with a decline of 2.6% from 2023 to 2024. The EBIT margin has significantly decreased to 2.1% in the TTM, down from 8.9% in 2021, reflecting challenges in operational efficiency.
Balance Sheet
85
Very Positive
Conagra Brands exhibits a strong balance sheet with a debt-to-equity ratio of 0.22 in the TTM, a substantial improvement from previous years, indicating reduced leverage. The equity ratio is robust at 42.3%, suggesting a stable financial structure with adequate shareholder equity to cover assets. Return on equity (ROE) is 3.7% in the TTM, which is lower than previous years, mainly due to declining net income. Overall, the balance sheet reflects a stable financial position with reduced financial risk.
Cash Flow
78
Positive
The cash flow statement reveals a commendable free cash flow generation, with a TTM free cash flow of $1.45 billion, showing resilience despite decreased net income. The operating cash flow to net income ratio is approximately 5.56, indicating strong cash generation relative to net income. However, free cash flow has decreased by 11% from the previous year, necessitating attention to sustaining operational cash flows. Overall, cash flow management remains a strong aspect of Conagra's financial health.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
11.74B12.05B12.28B11.54B11.18B11.05B
Gross Profit
3.10B3.33B3.26B2.84B3.18B3.07B
EBIT
514.70M852.80M1.08B1.35B1.78B1.45B
EBITDA
1.22B1.45B1.69B1.94B2.22B1.85B
Net Income Common Stockholders
329.10M347.20M683.60M888.20M1.30B840.10M
Balance SheetCash, Cash Equivalents and Short-Term Investments
49.40M77.70M93.30M83.30M79.20M553.30M
Total Assets
20.74B20.86B22.05B22.44B22.20B22.30B
Total Debt
8.15B8.61B9.42B9.18B9.19B9.95B
Net Debt
8.10B8.54B9.33B9.10B9.11B9.40B
Total Liabilities
11.97B12.35B13.25B13.57B13.56B14.35B
Stockholders Equity
8.78B8.44B8.74B8.79B8.55B7.88B
Cash FlowFree Cash Flow
1.45B1.63B633.20M712.90M961.70M1.47B
Operating Cash Flow
1.83B2.02B995.40M1.18B1.47B1.84B
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 Price22.48
Price Trends
50DMA
24.68
Negative
100DMA
25.04
Negative
200DMA
26.82
Negative
Market Momentum
MACD
-0.58
Positive
RSI
34.42
Neutral
STOCH
44.04
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 22.48 is below the 20-day moving average (MA) of 23.45, below the 50-day MA of 24.68, and below the 200-day MA of 26.82, indicating a bearish trend. The MACD of -0.58 indicates Positive momentum. The RSI at 34.42 is Neutral, neither overbought nor oversold. The STOCH value of 44.04 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 1 New Risks
1.
Trading Arrangements Q4, 2024

Conagra Brands Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
PPPPC
75
Outperform
$12.14B10.0336.53%2.35%145.82%
GIGIS
70
Outperform
$30.00B12.0327.37%4.38%-2.62%4.27%
CACAG
68
Neutral
$11.02B33.793.67%6.06%-3.15%-65.38%
MKMKC
67
Neutral
$19.90B25.4814.73%2.34%0.40%10.89%
CPCPB
66
Neutral
$10.64B20.5613.43%4.26%9.15%-31.94%
64
Neutral
$8.88B14.674.78%173.89%3.39%2.18%
SJSJM
55
Neutral
$12.23B22.22-3.55%3.74%7.07%-181.54%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CAG
Conagra Brands
22.48
-6.73
-23.04%
CPB
Campbell Soup
34.23
-10.46
-23.41%
GIS
General Mills
53.36
-14.35
-21.19%
SJM
JM Smucker
112.53
4.97
4.62%
MKC
McCormick & Company
72.54
0.57
0.79%
PPC
Pilgrim's Pride
50.91
18.66
57.86%

Conagra Brands Earnings Call Summary

Earnings Call Date:Apr 03, 2025
(Q3-2025)
|
% Change Since: -13.54%|
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.
Q3-2025 Updates
Positive Updates
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.
Negative Updates
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.

Conagra Brands Corporate Events

M&A TransactionsBusiness Operations and Strategy
Conagra Brands Sells Chef Boyardee for $600 Million
Neutral
May 1, 2025

On May 1, 2025, Conagra Brands announced the sale of its Chef Boyardee shelf-stable product line to Hometown Food Company for $600 million in cash, expected to close in the first quarter of fiscal year 2026. This divestiture is part of Conagra’s strategy to reshape its portfolio for long-term growth and focus on its frozen and healthy-snacking businesses, while using the proceeds to pay down debt. The transaction, contributing approximately $450 million to fiscal 2024 net sales, is anticipated to be four percent dilutive to adjusted earnings per share if completed at the start of fiscal year 2025.

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.