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ConAgra Foods - Growth & Income
ConAgra Foods, Inc. ( CAG ) touched a new 52-week high following the release of its strong fiscal second quarter report on December 20, which marked the fifth straight quarter with a positive earnings surprise. This Zacks Rank #2 (Buy) processed and packaged food maker also offers a solid dividend yield of 3.2%.
For its fiscal second quarter, ConAgra reported adjusted earnings per share of 57 cents, which exceeded the Zacks Consensus Estimate by 3.6% and topped last year's performance of 49 cents. Over the last 4 quarters, CAG has put together an average earnings beat of practically 9%.
Revenue increased 8.9% to $3.7 billion on the back of improved pricing and healthy performances at the Commercial and Consumer segments. Operating margin also improved to 8.4%, against 7.7% last year.
Earnings per share for fiscal 2013 are now expected to reach at least $2.06 per share, compared to the previously-expected range of $2.03 to $2.06.
Moreover, an added share driver for ConAgra was its agreement to acquire U.S. based private label food manufacturer Ralcorp Holdings, Inc. ( RAH ).This transaction will give rise to the largest private label packaged food company in North America. Also, ConAgra eyes expansion through a roughly $200 million investment in installing a new line to the plant at Lamb Weston frozen potato facility in Boardman, Ore.
Earnings Estimates Move Higher
The Zacks Consensus Estimate for fiscal 2013 gained 1.5% in the past 30 days to $2.09 per share, as 6 of 9 estimates were revised higher. The Zacks Consensus Estimate for fiscal 2014 advanced 2.7% in that time to $2.31. These estimates represent year over year growth of 13.7% for 2013 and 10.2% for 2014.
ConAgra has been regularly paying dividends and increasing the quarterly rates at intervals since 1977. The 5-Year average dividend yield for ConAgra Foods stands at 3.6%, while the stock currently yields a solid 3.2%, based on an annual dividend rate of $1.00 per share.
ConAgra Foods is currently trading at a forward P/E of 14.8x, compared with 16.2x for the peer group. The company's PEG ratio is currently 1.86. ROE stands at 17.7%, compared with the peer group average of 21.2%.
Headquartered in Omaha, Nebraska, ConAgra Foods was incorporated in 1919. The $12.6 billion company is one of North America's leading food processed and packaged food companies. With brands reaching almost 97% of North American homes, ConAgra Foods sells nearly 12.3 million packages of food products each day, including 3.8 million frozen food packages.
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CONAGRA FOODS (CAG): Free Stock Analysis Report
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