ConAgra Foods, Inc.
) reported improved year-over-year results for the third quarter
of fiscal 2014 (ended Feb 23, 2014). Earnings per share from
continuing operations, adjusted for items impacting
comparability, in the quarter were 62 cents, up 13% from 55 cents
in the year-ago quarter. The bottom line also surpassed the Zacks
Consensus Estimate of 60 cents.
On a GAAP basis, ConAgra generated earnings per share of 58
cents, up 107% year over year. The rise in earnings is
attributable to a hike in revenues.
ConAgra generated $4,389.7 million in revenues in the quarter,
exceeding the year-ago sales by 14.5%. However, revenues missed
the Zacks Consensus Estimate of $4,394.0 million.
On a segment basis, revenues from
decreased 3.5% year over year to $1,870.4 million. The results
reflect negative volume and price/mix impacts. Also, foreign
exchange transactions negatively impacted segment revenues by
Revenues from the
segment fell 0.7% year over year to $1,456.0 million due to lower
sales from the Lamb Weston potato business, partially offset by
contribution from acquisitions. The
segment generated $1,063.3 million in revenues, up a considerable
148.5% over the year-ago tally of $427.9 million. The rise in
segment revenues is primarily due to the accretive Ralcorp
In third-quarter fiscal 2014, ConAgra reported a 15.2%
year-over-year increase in its cost of sales. Higher expenses
pulled down gross margin by 50 basis points to 22.2%. Selling,
general and administrative (SG&A) expenses decreased 10.1%
and stood at 12.5% as a percentage of revenue. Interest expenses
shot up 34.6% year over year in the quarter to $95.0 million.
Balance Sheet/Cash Flow
Exiting third-quarter fiscal 2014, ConAgra had cash and cash
equivalents of $239.2 million, significantly up from $192.7
million at the end of the previous quarter. Senior long-term debt
stood at $8,564.8 million (excluding current portion), down
marginally from $8,575.2 million in the preceding quarter.
In the nine months ending Feb 2014, ConAgra generated cash
flow of $937.4 million from operating activities from continuing
operations, up from $780.8 million generated in the year-ago
period. Capital spent on additions of property, plant and
equipment totaled $471.0 million, up 64.7% year over year.
During the quarter, ConAgra paid dividends worth $105.0
Due to mixed segmental results for the third quarter of fiscal
2014, the company maintained its previous earnings per share
(adjusted for items impacting comparability) guidance in the
range of $2.22 to $2.25. ConAgra is expected to repay roughly
$550 million of debt in the fiscal year, generating operating
cash flow of $1.4 billion.
Also, ConAgra expects to witness annual earnings per share
growth of 10% in the fiscal 2016-2017 period, benefiting largely
from the Ralcorp acquisition.
ConAgra's current market capitalization is $12.4 billion and
has a Zacks Rank #4 (Sell). Some better-ranked stocks in the food
Diamond Foods, Inc.
Inventure Foods, Inc.
). While Unilever carries a Zacks Rank #1 (Strong Buy), Diamond
Foods and Inventure Foods hold a Zacks Rank #2 (Buy) each.
CONAGRA FOODS (CAG): Free Stock Analysis
DIAMOND FOODS (DMND): Free Stock Analysis
INVENTURE FOODS (SNAK): Free Stock Analysis
UNILEVER PLC (UL): Free Stock Analysis Report
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