Packaged foods makerConAgra Foods (
) 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
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
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
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 (
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 (
) andNestle (