Summary:
ConAgra's second-quarter fiscal 2015 adjusted earnings of $0.61 per share came in line with the Zacks Consensus Estimate. Revenues suffered a marginal year-over-year slip of 1.7%, primary due to the weak performance of its Private Brands' segment. The company aims to earn higher margins and revenues in the upcoming quarters on the back of its strategic inorganic and organic development plans. By considerably lowering its debt burden, the company promises to reward its shareholders soon through new repurchase and dividend hike plans. However, supply demand volatilities, exchange rate fluctuations and extensive market rivalry are the major issues faced by ConAgra. Based on these factors, we prefer to maintain a Neutral recommendation toward the stock at present.
Overview:
Omaha, NE-based ConAgra Foods, Inc. (CAG) is one of the leading food companies in North America, serving grocery retailers, restaurants and other foodservice establishments, with its brand present in 97% of America's households. Consumers find Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM, Peter Pan, Reddi-wip and many other ConAgra Foods brands in grocery, convenience, mass merchandise and club stores. ConAgra Foods also has a strong business-to-business presence, supplying potato and other vegetables, spices and grain products to a variety of well-known restaurants, foodservice operators and commercial customers. The company operates in three segments, namely, Consumer Foods, Commercial Foods and Private Brands.
The Consumer Foods segment includes branded food products that are sold through various retail and foodservice channels. These include meals, entrees, condiments, snacks and desserts across frozen, refrigerated, and shelf-stable temperature classes. This segment offers products under various brand names, like Angela Mia, Chef Boyardee, Egg Beaters, Hebrew National, Hunt's, Manwich, PAM, Peter Pan, Snack Pack, Reddi-wip, Rosarita, Van Camp's, Alexia, Kid Cuisine, Marie Callender's, ACT II, Orville Redenbacher's, Slim Jim, Blue Bonnet, Libby's, Parkay and Wesson.
The Commercial Foods segment provides commercially branded foods and ingredients along with private branded foods which are sold principally to foodservice, food manufacturing and industrial customers. Its primary products comprise specialty potato products, milled grain ingredients, various vegetable products, seasonings, blends and flavors that are sold under the brand names of ConAgra Mills, Lamb Weston and Spicetec Foods & Flavors.