On Feb 28, 2014, we issued an updated research report on
ConAgra Foods, Inc.
). The company reported strong results for the second quarter of
fiscal 2014. Year over year, earnings increased 9% to 62 cents,
while revenues hiked 26.5% to $4.7 billion.
Subsequent to the release of second quarter results, ConAgra
revised its outlook for the third quarter and fiscal 2014. The
company has lowered its adjusted earnings per share expectations
for fiscal 2014 to a range of $2.22 to $2.25 from $2.34 to $2.38
ConAgra has not been able to refurbish the Private Brands
segment's operating profits because of customer service, pricing
and sales force coverage issues in the segment within the
stipulated timeframe. Additionally, Consumer Foods and Commercial
Foods segments are expected to perform below expectations.
However, going forward, ConAgra expects to overcome these
difficulties and generate double-digit earnings growth in fiscal
2016 and 2017. Subsequent to fiscal 2017, management expects to
witness annual sales growth of 3-4% and earnings per share growth
ConAgra has also been losing control over price due to the
stiff competition in the industry, which may result in market
share loss, fall in sales and operating margins.
The reduced guidance led to negative estimate revisions over
the past 30 days. As a result, the Zacks Consensus Estimate for
fiscal 2014 declined 5.1% and now stands at $2.23 per share.
Also, the Zacks Consensus Estimate for fiscal 2015 reduced 8.8%
to $2.37 over the same timeframe.
Key Picks from the Sector
ConAgra currently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the industry include
J&J Snack Foods Corp.
Diamond Foods, Inc.
The Hain Celestial Group, Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
CONAGRA FOODS (CAG): Free Stock Analysis
DIAMOND FOODS (DMND): Free Stock Analysis
HAIN CELESTIAL (HAIN): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
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