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