ConAgra Q2 Earnings Beat - Analyst Blog

By Zacks Equity Research,

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ConAgra Foods, Inc. ( CAG ) reported estimate beating results, for the second quarter of fiscal 2014 (ended Nov 24, 2013). The results, we believe, will induce positive reactions from the market driving the share price higher.  

Earnings per share from continuing operations, adjusted for items impacting comparability, in the quarter were 62 cents, up 9% from 57 cents earned in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 55 cents.

On a GAAP basis, ConAgra generated earnings per share of 54 cents, up 4% year over year.


ConAgra generated $4,713.9 million in revenues in the quarter, exceeding the year-ago sales by 26.5% and above the Zacks Consensus Estimate of $4,640 million.

On a segmental basis, revenues from Commercial Foods increased 3.1% year over year to $1,574.0 million. The increase can be primarily attributed to contribution from the newly added Ralcorp foodservice business.

Revenues from the Consumer Foods segment fell 0.4% to $2,016.1 million. The result reflects flat volume and price/mix impacts. Private Brands segment (includes the majority of the former Ralcorp businesses and private label business previously reported within the Consumer Foods segment) generated $1,123.8 million in revenues, up a considerable 533.5% over year-ago revenues of just $177.4 million.


In the fiscal second quarter 2014, ConAgra reported a 29.1% year-over-year increase in its cost of sales. Higher expenses pulled down gross margin by 160 basis points. Selling, general and administrative (SG&A) expenses increased 16% and as a percentage of revenue stood at 12.1%. Interest expenses shot up 78.7% in the quarter to $95.4 million.

Balance Sheet/Cash Flow

Exiting the fiscal second quarter 2014, ConAgra had cash and cash equivalents of $192.7 million, slightly below $194.2 million at the end of the previous quarter. Senior long-term debt was at $8,575.2 million, down 0.5% sequentially.

ConAgra generated cash flow of $391.9 million from operating activities, up from $152.9 million generated in the year-ago quarter. Capital spent on additions of property, plant and equipment totalled $151.1 million, up 87.2% year over year.

During the quarter, ConAgra paid dividends amounting to $105.6 million and repurchased roughly 2 million shares for $69.1 million.


For fiscal 2014, considering both the second quarter outperformance and a cautious near-term outlook on the industry, ConAgra maintained its earnings per share (adjusted for items impacting comparability) guidance in the range of $2.34 to $2.38.

Ralcorp is expected to generate roughly 25 cents in fiscal 2014, while Ardent Mills, a joint venture, is expected to lower earnings by roughly 3 cents per share in fiscal 2014.

ConAgra's market capitalization is $13.41 billion and it is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the food industry include The Hain Celestial Group, Inc. ( HAIN ), Green Mountain Coffee Roasters, Inc. ( GMCR ) and United Natural Foods, Inc. ( UNFI ). All the three companies hold a Zacks Rank #2 (Buy).

CONAGRA FOODS (CAG): Free Stock Analysis Report

GREEN MTN COFFE (GMCR): Free Stock Analysis Report

HAIN CELESTIAL (HAIN): Free Stock Analysis Report

UTD NATURAL FDS (UNFI): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: CAG , GMCR , HAIN , UNFI

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