Chicago, Illinois-based Conagra Brands, Inc. (CAG) is one of the leading branded food companies in North America. It offers premium edible products, with refined focus on innovation. Valued at $12.9 billion by market cap, Conagra operates through Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice segments.
Companies worth $10 billion or more are generally described as “large-cap stock,” Conagra fits this bill perfectly. Given its extensive operations and rich heritage, Conagra’s valuations above this mark is unsurprising. Its portfolio of iconic and emerging food brands has continuously evolved to offer contemporary choices for every occasion.
However, the packaged food major has fallen to a lofty perch, with its stock dropping 17.2% below its 52-week high of $33.24 touched on Sept. 10. Furthermore, CAG has tanked 14.8% over the past three months, significantly underperforming the Nasdaq Composite’s ($NASX) 10% surge during the same time frame.
Conagra has lagged behind the Nasdaq over the longer term as well. In the past six months, CAG stock dipped 4.5% compared to NASX’s 11.7% gains during the same time frame. Meanwhile, CAG declined over 3.9% in the past 52 weeks lagging behind NASX’s 31.8% returns over the past year.
To confirm the downturn, CAG stock has remained below its 50-day and 200-day moving averages since early October with minor fluctuations.
Conagra Brands’ stock prices plunged nearly 2.1% after the release of its disappointing Q2 earnings on Dec. 19. Its net sales observed a 41-basis point decline compared to the year-ago quarter to $3.2 billion, due to a decrease in International and Foodservice segments’ sales which was partially offset by organic growth in Grocery & Snacks segment’s revenues. Meanwhile, selling, general, and admin (SG&A) expenses increased by a concerning 11.6% year-over-year to $444.1 million, which led to an 11.1% decline in earnings before tax to $346 million.
On a positive note, Conagra has observed some productivity gains and lower transportation costs which partially offset the increase in SG&A expenses, and its adjusted EPS of $0.70 exceeded analysts’ estimates by 2.9%.
Conagra has underperformed its peer Hormel Foods Corporation’s (HRL) 3% gains over the past three months and a marginal dip over the past year.
Among the 15 analysts covering the CAG stock, the consensus rating is a “Hold.” Its mean price target of $30.60 suggests an 11.2% upside potential from current price levels.
