CONAGRA FOODS INC. $28 - New York symbol CAG

CONAGRA FOODS INC. $28 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 406.1 million; Market cap: $11.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www. conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter, Orville Redenbacher popcorn and Reddiwip whipped cream.

In its fiscal 2013 first quarter, which ended August 26, 2012, ConAgra’s earnings soared 166.6%, to $250.1 million, or $0.61 a share. A year earlier, it earned $93.8 million, or $0.23 a share.

If you exclude all unusual items, including gains and losses on hedging contracts that ConAgra uses to lock in prices for wheat, corn and other ingredients, earnings per share would have risen 41.9%, to $0.44 from $0.31.

ConAgra continues to benefit from new products, such as Greek frozen yogurt. Savings from a recent restructuring plan have also spurred its earnings.

Sales rose 6.7%, to $3.3 billion from $3.1 billion. Sales to consumers (which account for 62% of the total) rose 8.0%, mainly due to contributions from acquisitions and higher selling prices. Business sales (38% of overall revenue) rose 4.6%.

The company now expects to earn $2.03 to $2.06 a share in fiscal 2013. That’s up from its earlier forecast of $1.95 to $1.99. The stock trades at a reasonable 13.7 times the midpoint of the new range.

ConAgra also raised its quarterly dividend by 4.2%, to $0.25 a share from $0.24. The new annual rate of $1.00 yields 3.6%.

ConAgra is a buy.

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