ConAgra Foods (CAG) Shares Sell off on Lower Than Expected Revenue

Shares of ConAgra Foods Inc. (CAG) were trading down -1.60 or -3.36 percent to $46.00 per share in Thursday’s premarket after the company reported fourth quarter earnings that met market expectations but missed on revenue early this morning. ConAgra Foods stock closed at $47.60 per share, up +0.50 or +1.06 percent in Wednesday’s regular trading session.

Stock Analysis

Founded in 1919 in Grand Island, Nebraska, Omaha, Nebraska based ConAgra Foods, Inc. makes and sells a variety of food products carrying some of the most recognized name brands in North America.
Brands names such as Hunts, Banquet, Hebrew National, Healthy Choice, Reddi-wip, Orville Redenbacher, Slim Jim and Marie Callender’s make up just a few of ConAgra’s wide array of food products.

In addition to its widely recognized food brands, ConAgra Foods also has a presence in the business to business food industry. The company supplies frozen potato and sweet potato products in addition to other vegetable, grain and spice products to many well known restaurants, commercial customers and food service operators.

For the company’s fiscal fourth quarter of 2016 ended on May 29th, ConAgra Foods reported earnings per share from continued operations of -$0.07, which reflected a year end charge for the re measurement of pension amounts. This compares to earnings per share of $0.54 in the same period one year ago. On an adjusted basis earnings per share from continued operations came to $0.52 per share versus $0.55 in last year’s fourth quarter.

In addition, ConAgra attributed part of the decline in earnings per share to an additional week in 2015’s fourth quarter that added an additional seven percent to the sales and volume performance for fiscal 2015 fourth quarter earnings. Revenue for the quarter came to $2.83 billion compared to $3.13 billion in the same period one year ago. Analysts expected the company to report earnings of $0.52 on revenue of $2.89 billion.

Sean Connolly, Chief Executive Officer of ConAgra Foods stated in the company’s press release that, “Fiscal 2016 was a year of tremendous accomplishment and progress, as we reshaped the portfolio, strengthened the balance sheet, and transformed our culture. Specifically, we divested the Private Brands operations, repaid approximately $2.5 billion of debt, announced plans to spin-off Lamb Weston and sell other parts of the Commercial Foods segment, and prepared to move our headquarters to Chicago as part of becoming more lean and agile.”

For the company’s full year, adjusted diluted earnings per share from continuing operations came to $2.08 versus $1.93 in fiscal 2015. Revenue for the full year totaled $11.64 billion compared to $11.94 billion in the previous year. The analyst consensus was for the company to report full year earnings per share of $2.10 on revenue of $11.71 billion.

In the company’s outlook statement, ConAgra expects to complete its separation into two companies, which it announced in November of last year. The company will separate into ConAgra Brands and Lamb Weston through a tax free spinoff of the Lamb Weston business. ConAgra will report its first fiscal quarter results as a consolidated enterprise in September, expecting double digit year on year earnings per share growth.

The company’s guidance for the first quarter of its 2017 year is for earnings per share of $0.49 on revenue of $2.8 billion. For the full 2017 fiscal year, ConAgra expects earnings per share of $2.41 on revenue of $11.78 billion.

Other News About CAG

ConAgra Foods' European Partner Announces Agreement to Serve Russian Market Through Joint Venture

Dutch based Meijer Frozen Foods, ConAgra’s European partner has signed an agreement with Russian company Belaya Dacha to serve the Russian market.

What Are Wall Street Analysts’ Recommendations for ConAgra?

Article on the analyst consensus’ for the company’s 12 month price target.

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Published on Jun 30, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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