Shares of this food products giant continue have stayed strong as consumers continue to eat at home even as the pandemic eases.
That helps explain why sales are up 8.5% in the most recent quarter.
Still, the stock trades at just 13.5 times the company’s 2021 earnings forecast.
CONAGRA BRANDS INC. (New York symbol CAG) let you tap the maker of some of North America’s most popular food brands. They include Chef Boyardee canned pasta, Hunt’s tomato sauce, Orville Redenbacher popcorn and Reddi-wip whipped cream.
In January 2021, Conagra sold its Peter Pan peanut butter business to Post Holdings Inc. (New York symbol POST). The company received $103.4 million and booked a $49.7 million gain on the deal.
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Conagra is also reportedly close to selling its Hebrew National all-beef hot dog business to Brazilian food maker JBS SA for $700 million.
Meantime, the COVID-19 pandemic continues to fuel strong demand for Conagra’s products as more people eat meals at home. At the same time, the company continues to adjust its products, particularly frozen foods, to better appeal to health-conscious consumers. That should help it retain customers as restaurants reopen.
Dividend Stocks: Rising revenues and earnings at an attractive valuation
Overall sales in Conagra’s fiscal 2021 third quarter, ended February 28, 2021, rose 8.5%, to $2.77 billion from $2.56 billion a year earlier. That beat the consensus forecast of $2.71 billion. If you exclude the businesses that Conagra recently sold as well as foreign exchange rates, sales gained 9.7%. That reflects a 6.1% increase in volume and a 3.6% rise in prices.
Disregarding costs related to a cost-cutting plan and other unusual items, overall earnings in the quarter jumped 24.0%, to $287.5 million from $231.8 million. Conagra spent $298.1 million on share buybacks in the latest quarter. As a result of fewer shares outstanding, per-share earnings rose at a faster rate of 25.5%, to $0.59 from $0.47. That also beat the consensus estimate of $0.58.
For all of fiscal 2021, Conagra expects to earn between $2.63 and $2.73 a share. The stock trades at an attractive 13.5 times the midpoint of that range.
The company also raised your quarterly dividend by 29.4% with the December 2020 payment. Investors now receive $0.275 a share instead of $0.2125. The new annual rate of $1.10 yields 3.1%.
1. Should we be cautious if the deal with Brazilian food maker does not go through?
2. Also post pandemic, people will start eating out more, with things opening up
Thanks for your question. This is only one of ConAgra’s legacy brands, but if the sale doesn’t go through, it will still be a valuable unit. Conagra has a wide variety of businesses, including its food service unit, which sells to restaurants as well.
Thanks for the question. We continue to believe that it pays to hold Resource stocks as part of a balanced portfolio. That includes oil stocks, especially integrated oil companies. As the global economy recovers we expect that the strongest leaders in the industry. We recommend several in our advisories will successfully lower their long-term debt loads.
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1. Should we be cautious if the deal with Brazilian food maker does not go through?
2. Also post pandemic, people will start eating out more, with things opening up
Are the above risks to enter into Conagra?
Thanks for your question. This is only one of ConAgra’s legacy brands, but if the sale doesn’t go through, it will still be a valuable unit. Conagra has a wide variety of businesses, including its food service unit, which sells to restaurants as well.
I read that oil stocks are expected to pay off debt in the next year or so. True?
Thanks for the question. We continue to believe that it pays to hold Resource stocks as part of a balanced portfolio. That includes oil stocks, especially integrated oil companies. As the global economy recovers we expect that the strongest leaders in the industry. We recommend several in our advisories will successfully lower their long-term debt loads.