Chicago-based Conagra Brands, Inc. (CAG) is a leading consumer packaged goods company. Valued at $14.49 billion by market cap, the company offers premium edible products and serves customers through its brands Birds Eye, Duncan Hines, Healthy Choice, Marie Callender’s, Reddi-wip, Slim Jim, Angie’s BOOMCHICKAPOP, and many more.
Shares of this consumer-packaged goods company have significantly underperformed the broader market over the past 52 weeks. CAG has declined 3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 18.2%. In 2024, shares of CAG are up 5.7%, compared to SPX’s 11.5% gains on a YTD basis.
Narrowing the focus, CAG’s underperformance is also apparent compared to the S&P 500 Cons Staples Sector SPDR (XLP). The exchange-traded fund has gained about 5.8% over the past year. Moreover, the ETF’s 9.7% gains on a YTD basis compare to the stock’s returns over the same time frame.
On Jul. 11, CAG shares fell more than 3% after the company reported its Q4 results. Its net sales of $2.91 billion fell below the consensus estimates of $2.93 billion, but its adjusted EPS of $0.61 beat Wall Street expectations of $0.57. The company expects its fiscal 2025 EPS to be between $2.60 and $2.65, below the $2.69 estimate. Its fiscal 2025 organic sales are expected to be down 1.5% to flat compared to fiscal 2024.
CAG’s overall performance can be attributed to higher interest rates and persistent inflation. Higher prices for consumer products have affected consumers, forcing them to be careful about their spending, thus affecting the volumes of consumer product manufacturers.
For the current fiscal year, ending in May 2025, analysts expect CAG to report an EPS decline of 2.3% to $2.61 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 13 analysts covering CAG stock, the consensus rating is a “Hold.” That’s based on one “Strong Buy” rating and 12 “Holds.”
This configuration has been consistent over the past three months.
Recently, Wells Fargo set an “Equal Weight” rating on CAG stock and reduced its price target from $32 to $31, implying a potential upside of 2.3% from current levels.
The mean price target of $30.14 represents a marginal downside to CAG’s current price levels. The Street-high price target of $33 suggests an upside potential of 8.9%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
