Conagra Brands Faces Stock Struggles Amid Challenging Market Conditions
Conagra Brands, Inc. (CAG), a significant player in the North American food industry, reported a discouraging performance recently, showcasing the challenges it faces in a competitive landscape.
Based in Chicago, Conagra stands out as one of the top branded food companies with a market cap of $12.9 billion. The company operates across various segments, including Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice. Being classified as a “large-cap stock,” Conagra’s size is indicative of its extensive reach and historical significance in the food market.
Stock Performance Dips Below Recent Highs
Despite its strong market presence, Conagra’s stock has faced difficulties. It has fallen 17.2% from its 52-week high of $33.24 reached on September 10. In the past three months, the CAG stock has dropped 14.8%, lagging well behind the Nasdaq Composite’s ($NASX) 10% rise during the same period.
The trend is consistent over a longer timeline, with CAG stock down 4.5% in the past six months versus NASX’s gains of 11.7%. Over the past year, CAG has declined by 3.9%, while the Nasdaq has surged by 31.8%, indicating a notable disparity in performance.
Additionally, CAG stock has remained below its 50-day and 200-day moving averages since early October, indicating a concerning trend with little recovery.
Disappointing Earnings Add to Concerns
The company’s challenges were highlighted when its Q2 earnings report was released on December 19, leading to a nearly 2.1% drop in stock prices. Conagra’s net sales fell to $3.2 billion, showing a decline of 41 basis points compared to the previous year. This drop was influenced by weaker sales in its International and Foodservice segments, though it was somewhat offset by growth in the Grocery & Snacks division.
On the cost side, SG&A expenses rose by 11.6% year-over-year to $444.1 million, resulting in an 11.1% decline in earnings before tax to $346 million. However, the company did find some relief with productivity improvements and lower transportation costs, which helped mitigate the overall expenses. Notably, Conagra posted an adjusted EPS of $0.70, surpassing analysts’ estimates by 2.9%.
Market Outlook and Analyst Sentiment
In comparison with Hormel Foods Corporation (HRL), which gained 3% over the last three months, Conagra has struggled to keep pace, indicating broader industry challenges. Currently, the consensus rating from the 15 analysts covering CAG stock is a “Hold,” with a mean price target of $30.60, presenting an 11.2% upside potential from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
