On Monday, RBC Capital Markets sustained their Sector Perform rating and $27.00 price target for ConAgra Brands, Inc. (NYSE:CAG). According to InvestingPro data, the stock appears undervalued at its current price of $26.92, with a market capitalization of $12.8 billion. The decision comes after the company faced a challenging quarter, which was anticipated following discussions at the Consumer Analyst Group of New York (CAGNY) conference. ConAgra’s financial performance was notably affected by supply chain disruptions within its Refrigerated & Frozen segment and a persistently tough consumer market.
The company also encountered headwinds due to the timing of trade expense accruals, which impacted their top-line revenue. Despite missing targets for organic growth and earnings per share (EPS), management at ConAgra reaffirmed their full-year guidance. This optimism is based on the expected partial recovery of the businesses that were affected and the anticipation of continued robust consumption.
RBC Capital’s analysis reflects caution due to the high levels of uncertainty in the current operating climate, which has led them to maintain a neutral stance on ConAgra’s stock. The commentary from RBC Capital highlights the complexities ConAgra is navigating, including variable consumer behavior and operational challenges.
While ConAgra’s management has expressed confidence in their ability to meet year-end goals, RBC Capital underscores the importance of watching for potential shifts in the market and consumer patterns that could influence the company’s performance. The reaffirmed $27.00 price target suggests that RBC Capital sees limited movement in ConAgra’s stock price in the near term, aligning with their wait-and-see approach. InvestingPro analysis reveals that six analysts have recently revised their earnings downwards, though the company maintains a fair overall financial health score. Discover more comprehensive insights and 10 additional ProTips for CAG in the exclusive Pro Research Report.
In other recent news, ConAgra Brands Inc. reported third-quarter earnings that fell short of analyst expectations, with earnings per share (EPS) at $0.51 compared to the forecasted $0.54. Revenue also missed projections, coming in at $2.84 billion against the anticipated $2.92 billion. The company attributed these shortfalls to supply chain disruptions, particularly in the Refrigerated & Frozen segment, which led to a 5% decline in organic sales. Despite these challenges, ConAgra reaffirmed its full-year 2025 guidance, projecting a 2% decrease in organic sales, an operating margin of 14.4%, and an EPS of approximately $2.35.
Stifel analysts maintained a Hold rating on ConAgra’s stock, with a consistent price target of $26, noting the company’s potential for stabilization despite current challenges. The firm highlighted that an inventory rebuild and improved margin performance in the fourth quarter could offset the third-quarter shortfall. ConAgra also reported a significant free cash flow conversion rate of 125% and paid down $500 million of debt over the past year.
The company continues to focus on operational improvements and strategic initiatives, particularly in the frozen foods and protein-centric snacks segments. Analysts from Stifel are aligned with ConAgra’s full-year EPS estimate, suggesting that the company’s efforts in inventory management and cost efficiency could yield positive results in the near term.
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