ConAgra Hits New High; Dividend Yield Strong At 3.3%

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Packaged foods makerConAgra Foods ( CAG ) has increased its dividend for three straight years, and its shares touched a new 52-week high Thursday following a strong quarterly earnings report.

ConAgra gapped up as much as 4% intraday to a high of 31.12 after the company said fiscal second-quarter profit rose 16% from a year ago, beating expectations. Revenue climbed 9%, picking up for the second straight quarter. The company also raised its full-year outlook.

The stock later staged a negative reversal Thursday, giving up most of the day's gains. It's now 4% above a 28.90 flat-base buy point.

The maker of foods under labels such as Marie Callender's, Chef Boyardee and Slim Jim cited moderating raw materials costs, cost-containment efforts and acquisitions as reasons for its strong performance.

ConAgra is up about 14% year-to-date, about in line with the S&P 500's increase.

Omaha, Neb.-based ConAgra announced in September that it was boosting its quarterly dividend by a penny to 25 cents a share, citing its strong cash flow and earnings outlook. The annual dividend yield is currently 3.3%, well above the S&P 500 average of 2.1%.

The company has steadily increased its quarterly dividend from 19 cents a share in 2009.

ConAgra said Thursday its $5 billion acquisition of Ralcorp is on track to close early in 2013. The company has acquired several companies recently, the latest being the Home Menu frozen meals businesses fromUnilever ( UL ).

But Fitch downgraded ConAgra's long-term debt rating after it announced the Ralcorp deal in late November, saying it would "substantially" increase the company's debt burden.

Still, ConAgra's debt-to-equity ratio is a manageable 64%, and cash flow per share has increased for four straight years, to $2.80, amid productivity improvements.

ConAgra on Thursday raised its full-year profit forecast to at least $2.06 per share, up from its earlier estimate of $2.03-$2.06 but below analyst expectations for $2.07.

Risks to its outlook include volatile prices of beef, wheat and other raw materials. It also faces stiff competition from the likes ofKraft Foods ( KRFT ) andNestle ( NSRGY ).



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CAG , KRFT , NSRGY , UL

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