The recent divestiture of Conagra Brands’ majority stake in its Indian snacks subsidiary allows it to focus resources on its core North American brands.
This strategic move simplifies the business model and positions the company to capitalize on growth opportunities in its key markets. As the company leverages its powerful brand equity, it’s poised to navigate industry headwinds, withstand challenges and emerge as a leaner, more profitable organization.
Meanwhile, the stock trades at 10.4 times the company’s forward earnings forecast.
CONAGRA BRANDS INC. (New York symbol CAG) lets you tap the maker of some of North America’s most popular food brands. They include Chef Boyardee canned pasta, Hunt’s tomato sauce, Birds Eye frozen meals, Orville Redenbacher popcorn and Reddi-wip whipped cream.
The company reported weaker-than-expected sales and earnings for its latest quarter, as cost-conscious consumers switched to cheaper alternatives. A manufacturing problem also cut production of its Hebrew National hot dogs during the busy summer grilling season. However, Conagra continues to benefit from improving supply chains and a cost-cutting plan.
Conagra’s sales in its fiscal 2025 first quarter, ended August 24, 2024, fell 3.8%, to $2.79 billion from $2.90 billion from a year earlier. That missed the consensus forecast of $2.84 billion.
If you exclude businesses it bought and sold, as well as currency rates, Conagra’s organic sales declined 3.5%. That’s due to lower prices (down 1.9%) and volumes (down 1.6%).
The lower sales also cut earnings before unusual items by 19.7%, to $0.53 a share (or a total of $252.6 million) from $0.66 a share (or $315.9 million). That also missed the consensus estimate of $0.59 a share.
[ofie_ad]
Value Stocks: Conagra Brands’ cost-cutting plan helps navigate supply chain and inflation challenges
The company’s restructuring plan should cut $1 billion from its annual costs by the end of fiscal 2025. It now expects to earn between $2.60 and $2.65 a share for the full year, and the stock trades at a moderate 10.4 times the midpoint of that range. The $1.40 dividend looks safe, and it yields a solid 5.1%.
Meanwhile, the company has completed the sale of its 51.8% stake in Agro Tech Foods Limited. Based in India, this firm makes a variety of foods such as breakfast cereals, snacks and candies.
Conagra did not say how much it received, but earlier disclosed it expected proceeds of $78 million.
The sale will let the company focus on its main businesses in North America. A deal to license some of its brands to Agro Tech will also let it continue to benefit from rising demand for snack foods in India.
Recommendation in Wall Street Stock Forecaster: Conagra Brands Inc. is a buy.
