On Apr 10, 2014, we issued an updated research report on
ConAgra Foods, Inc.
). The company reported improved year-over-year results for the
third quarter of fiscal 2014 (ended Feb 23, 2014). Adjusted
earnings per share in the quarter decreased roughly 13% year over
year to 62 cents. Moreover, quarterly revenues of $4.4 billion
were up 14.5% from the year-ago quarter.
Increase in revenues was primarily due to the inclusion of
recently acquired Ralcorp in Jan 2013. The integration of Ralcorp
is on track and is expected to contribute roughly 20 cents per
share in fiscal 2014. Going forward, the Ralcorp acquisition is
anticipated to drive the company's revenues significantly higher.
Moreover, the company has been managing its costs appropriately
which led to the growth in earnings in the third quarter of
However, the company's failure to restore the Private Brands
segment to the desired operating profit level is being viewed as
a negative. Lower margins in the Commercial Foods segment and
lower volumes in the Consumer Foods segment further add to the
woes. The loss of a major customer in Lamb Weston potato business
also hampered revenues in the reported quarter.
Additionally, ConAgra faces intense competition from the
manufacturers of branded, private brand and customized food
products. This reduces the company's price control over its
products, which may result in market share loss, fall in sales
and operating margins.
With a market capitalization of $12.9 billion, ConAgra has a
Zacks Rank #4 (Sell). Some better-ranked stocks in the industry
that warrant a look include
Inventure Foods, Inc.
Diamond Foods, Inc.
J&J Snack Foods Corp.
), While Inventure Foods sports a Zacks Rank #1 (Strong Buy),
Diamond Foods and J&J Snack Foods carry a Zacks Rank #2
CONAGRA FOODS (CAG): Free Stock Analysis
DIAMOND FOODS (DMND): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
INVENTURE FOODS (SNAK): Free Stock Analysis
To read this article on Zacks.com click here.