On Apr 16, we maintained our long-term Outperform
ConAgra Foods, Inc.
), due to its strong fiscal third quarter results, ending Feb 24,
Why the Reiteration?
ConAgra's earnings per share of 55 cents in fiscal third
quarter of 2013, reported on Apr 3, improved 7.8% year over year.
Also, ConAgra generated revenues of $3,850.5 million in the
quarter, an increase of 13.4% year over year, driven by enhanced
volumes and contributions from acquired businesses.
Since the announcement of the results, estimates have moved in
either direction for fiscal 2013 and 2014. The current consensus
estimate for fiscal 2013 rests at $2.15, unmoved over the last 30
days. However, for fiscal 2014, the current estimate increased
1.2% to $2.49 per share, over the same time frame.
The January acquisition of Ralcorp Holdings Inc. is blending
well with ConAgra's operations. In less than a month, Ralcorp's
contribution to the business was substantial; the company
generated $292.0 million in sales and $22.0 million of operating
profits in the reported quarter. Thus, ConAgra reaffirmed that
Ralcorp will contribute roughly 5 cents per share to fiscal 2013
earnings and 25 cents per share to fiscal 2014 earnings.
The tie up of ConAgra with privately held Cargill Inc. and
) announced in March 2013, to form a new mill - Ardent Mills, is
also expected to boost earnings in the long-term. Subject to
regulatory approvals, this new mill is expected to start in late
calendar year 2013. This can boost the earnings for fiscal 2014
However, we cannot rule out risks such as, overspending in
marketing activities, increased competition as well as volatility
in the raw material markets.
Other Stocks to Consider
ConAgra currently carries a Zacks Rank #2 (Buy). Other stocks
worth a look in the food industry are
Flowers Foods Inc.
), carrying a Zacks Rank #1 (Strong Buy); while
) carries a Zacks Rank #2 (Buy).
CONAGRA FOODS (CAG): Free Stock Analysis
CHS INC (CHSCP): Get Free Report
CAMPBELL SOUP (CPB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
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