Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Conagra Foods Flying, Despite Inflationary Challenges

Stock MarketsOct 10, 2021 08:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Conagra Foods Flying, Despite Inflationary Challenges

Foods giant Conagra Foods (CAG), which features such brands as Healthy Choice, Hunt's, and hot dog legend Hebrew National, posted its earnings report recently. The company managed to turn in beats on all fronts. Some were more narrow than others, however, and the company also pointed out the problems inflation is having on the company. Despite these issues, I remain bullish on Conagra Foods.

Conagra's year was mostly one of plateaus. The company has had some ups and downs in its share price, but has held very close to one pricing level. Most of 2021 for Conagra Foods saw shares priced between $34 and $38 per share. It's broken out of that range occasionally, but it tends to return to that range. The company's shares spent March through mid-June in the $36 to $38 range, with a week in June spent just above $38. After June 30, however, the company's closing prices slipped back under $36 and stayed there to this day. (See Conagra stock charts on TipRanks)

The company's newest earnings report gave the company extra credibility. It beat estimates on earnings, if somewhat narrowly. The company posted adjusted earnings of $0.50 per share against estimates calling for $0.49 per share. Revenue also proved to be a win for Conagra, as the company posted revenue of $2.65 billion. Though that was down a bit against last year's figure of $2.68 billion, it was enough to take down Refinitiv's estimates that called for $2.54 billion.

In specific categories, Conagra posted noticeable declines in the amount of frozen foods and snacks sold. Groceries and snacks were down 4.9% against the same time last year, and frozen foods were down 2.5%. That could be a result of COVID petering out, as pandemic-related stocking up had marked the summer of 2020. Also, although some businesses reopened this past quarter, they often faced occupancy restrictions thanks to social distancing requirements. That could have impacted on the amount of food consumers purchased.

Wall Street's Take

Wall Street consensus analysis calls Conagra a Moderate Buy. That's based on the reports of 11 Wall Street analysts who have offered 12-month price targets for Conagra within the last three months. Of these, three call Conagra a Buy while the remaining eight call it a Hold.

Conagra's Moderate Buy status is comparatively new. It's only enjoyed that rank since July, when it switched over from being a Hold. Conagra was considered a Hold since January 2021, when it switched over from being a Moderate Buy.

The average Conagra price target is in a very narrow range. Interestingly, the price target range largely reflects the company's trading range, with a little room for improvement. The average price target is $37.09, with a high of $40 and a low of $34. Based on the last-seen price of $33.72, that represents a 9.99% upside potential.

Food is a Staple

You'll notice that Conagra has traded in a very tight range for most of the year. That makes sense at the outset. Conagra is not the kind of company that's likely to innovate so brilliantly that it destabilizes the market. What's it going to do, come up with a whole new flavor of corn? Food is food, and all Conagra can do to really affect its market is persuade more people to buy its food offerings.

So we've seen Conagra hold a fairly tight trend line for most of a year. That's a statement made in heaven for one particular class of investor: income investors. Conagra has an extremely regular dividend, going back years. Dividend payments have been mostly regular, with one missing from 2013, one changed in date in 2020 from the more typical July to early August, and the summer payment seemingly absent from this year. Dividend payments have increased as well, slowly but surely, over the years. Back in July 2011, the company offered a dividend of $0.23. Today, the payment with an ex-dividend date of October 29 will be around $0.31.

A stock with minimal appreciation and decline, as well as a fairly stable dividend that increases regularly, is likely what a lot of income investors are looking for. Add to it that the price to get in isn't exactly onerous, and it's certainly worth considering for an income investor's portfolio. The fact that the company's entire stock in trade is food insulates it from all but the most devastating economic conditions. People can postpone cruises and vacations. They can put off fancy new electronics purchases. Most people, however, don't put off food purchases if at all possible.

Concluding Views

Conagra has a distinct advantage in the marketplace, in that it sells a product people need for sustenance. While it certainly has competitors—and some lower-priced—its susceptibility to market conditions is low, overall. Throw in a reliable dividend with regular increases, and that makes Conagra very attractive to some investors.

Conagra's market is comparatively secure. It's only somewhat price sensitive due to the vital nature of its product. Its share price trend line is about as stable as it gets and its dividend is likewise. For income investors, Conagra is a great place to start looking, and a big part of why I'm bullish on it.

Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.

​Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

Conagra Foods Flying, Despite Inflationary Challenges

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email