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How stable are ConAgra Foods (USA Stocks:CAG) basic indicators given the current rise?

January 4, 2024  By Ellen Johnson
Macroaxis Story
ConAgra Foods (NYSE:CAG) has been demonstrating strong financial performance, with a reported EBITDA of $1.47B and a healthy operating income of $1.1B. The company's revenue per share stands at $25.67, further underlining its profitability. Despite a change in working capital reported at a loss of $816M, ConAgra has maintained a solid net asset base of $22.05B. The company's debt to equity ratio is low at just 1.05%, which suggests that it is not overly reliant on borrowing to finance its operations. Considering these fundamentals, ConAgra Foods may well maintain its bullish momentum in the coming month.

Main Points

ConAgra Foods is currently undervalued at $30.81 per share, with modest growth projections in the near future. Given a three-month investment horizon, ConAgra Foods demonstrates considerable stability. The company's Sharpe Ratio, or Efficiency, stands at 0.14, indicating that the company has generated a 0.14% return per unit of risk over the past three months. When forecasting the volatility of a stock, it's essential to utilize all available market data in conjunction with stock-specific technical indicators that cannot be diversified away. We have identified twenty-one technical indicators for ConAgra Foods, which can be used to evaluate the company's future volatility. We recommend utilizing ConAgra Foods' Risk Adjusted Performance of 0.0557, downside deviation of 1.35, and Mean Deviation of 1.06 to verify if our risk estimates align with your expectations.
Published over a year ago
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Reviewed by Gabriel Shpitalnik

ConAgra Foods (NYSE:CAG), a prominent player in the Consumer Defensive sector, specifically in the Packaged Foods & Meats category, has been showing bullish momentum in the market. With a market capitalization of $14B and a low beta of 0.59, the company exhibits stability and potential for growth. The company's financial health is reflected in its retained earnings of $6.6B and a positive EBIT of $1.1B. However, it's worth noting that ConAgra has significant liabilities, with total current liabilities standing at $4.4B and long-term debt totaling $7.1B. Despite this, the company's strong institutional ownership of 87.29% suggests confidence in its future performance. As we move into February, the question remains whether ConAgra can maintain its bullish momentum. At present, it is anticipated that ConAgra Foods' Average Invested Capital will decrease significantly in the forthcoming years. The company's current Market Capitalization is projected to rise to approximately $18.2 billion, while its Average Assets are expected to decline to roughly $22.3 billion. Despite nearly stable basic indicators, ConAgra Foods is not fully leveraging its potential. The recent fluctuation in the stock price may lead to mid-term volatility for the shareholders. The question remains, will shareholders continue to hold, or should we anticipate a sell-off?
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include ConAgra Foods income statement, its balance sheet, and the statement of cash flows. Potential ConAgra Foods investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although ConAgra Foods investors may use each financial statement separately, they are all related. The changes in ConAgra Foods's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on ConAgra Foods's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of ConAgra Foods fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of ConAgra Foods performance into the future periods or doing a reasonable stock valuation. The intrinsic value of ConAgra Foods shares is the value that is considered the true value of the share. If the intrinsic value of ConAgra is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares ConAgra Foods. Please read more on our fundamental analysis page.

How effective is ConAgra Foods in utilizing its assets?

ConAgra Foods reports assets on its Balance Sheet. It represents the amount of ConAgra resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, ConAgra Foods aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Packaged Foods & Meats space. To get a better handle on how balance sheet or income statements item affect ConAgra volatility, please check the breakdown of all its fundamentals.

Are ConAgra Foods Earnings Expected to grow?

The future earnings power of ConAgra Foods involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of ConAgra Foods factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. ConAgra Foods stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of ConAgra expected earnings.

ConAgra Foods Gross Profit

ConAgra Foods Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing ConAgra Foods previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show ConAgra Foods Gross Profit growth over the last 10 years. Please check ConAgra Foods' gross profit and other fundamental indicators for more details.

Breaking down ConAgra Foods Indicators

Institutional investors typically avoid acquiring a high percentage of ConAgra Foods stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of ConAgra is distributed among investors.

Ownership Allocation

ConAgra Foods retains a total of 477.97 Million outstanding shares. The majority of ConAgra Foods outstanding shares are owned by other corporate entities. These outside corporations are usually referred to as non-private investors looking to acquire positions in ConAgra Foods to benefit from reduced commissions. Consequently, institutional investors are subject to a different set of regulations than regular investors in ConAgra Foods. Please pay attention to any change in the institutional holdings of ConAgra Foods as this could imply that something significant has changed or about to change at the company. Note that regardless of who owns the company, if the true value of the entity is less than the market is willing to pay for it, you may not be able to generate positive returns over time.
Retail Investors
12.2%
Institutions
87.29%
Retail Investors12.2
Insiders0.51
Institutions87.29
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence ConAgra Foods' decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over ConAgra Foods' decisions due to their larger holdings.
 2014 2019 2023 2024 (projected)
Consolidated Income678.4M683.2M841.8M761.3M
Direct Expenses6.9B9.0B8.0B9.5B
Consolidated IncomeDirect Expenses

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. ConAgra Foods has an asset utilization ratio of 55.67 percent. This implies that the company is making $0.56 for each dollar of assets. An increasing asset utilization means that ConAgra Foods is more efficient with each dollar of assets it utilizes for everyday operations.
Assets Non Current
19.1 B		Goodwill
14.7 B
Current Assets2.84 Billion7.76
Assets Non Current19.05 Billion52.1
Goodwill14.67 Billion40.14
"As the saying goes, 'Cash is king,' and ConAgra Foods (NYSE:CAG) seems to be sitting on a comfortable throne with an end period cash flow of $93.9M. Despite a net borrowing of $259.7M, the company's robust net asset of $22.05B and a healthy operating margin of 0.18% indicate a strong financial position. However, the payout ratio of 67.65% and dividends paid amounting to $623.8M suggest that the company is returning a significant portion of its earnings to shareholders, which could limit its ability to reinvest in growth opportunities. The company's PE ratio stands at 13.01, lower than the industry average, indicating that the stock may be undervalued. With a market capitalization of $13.99B and a forward PE of 10.989, ConAgra Foods appears to be in a strong position to maintain its bullish momentum in February. However, investors should keep an eye on the company's high total debt of $9.24B and short-term debt of $2.2B, which could pose risks in the long run."

ConAgra Foods has a small chance to finish above $30 in 2 months

The current total risk alpha for ConAgra Foods, a metric that gauges the disparity between a portfolio's actual returns and its anticipated performance, is at -0.25. This negative figure suggests that the stock has underperformed in the context of risk-adjusted returns. Consequently, it implies that ConAgra Foods has a relatively low probability of exceeding $30 in the forthcoming two months. Investors are advised to exercise prudence and take this risk factor into account when making investment decisions. ConAgra Foods exhibits relatively low volatility, with a skewness of 0.37 and a kurtosis of 0.88. Nonetheless, we recommend that all investors conduct independent research on ConAgra Foods to ensure that all available information aligns with their expectations regarding its upside potential and future expected returns. Understanding varying market volatility trends can often assist investors in timing the market. The appropriate use of volatility indicators allows traders to compare ConAgra Foods' stock risk against market volatility during both bullish and bearish trends.
The increased level of volatility that accompanies bear markets can directly affect ConAgra Foods' stock price, causing stress for investors as they witness the value of their shares decline. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. In conclusion, ConAgra Foods (CAG) presents a mixed bag for potential investors. With a current market valuation of $29.28, it's slightly undervalued compared to its real value of $30.81. The analysts' consensus is a 'Hold' with 12 out of 13 analysts recommending this stance. The estimated target price ranges from a low of $28 to a high of $40, with an average target price of $30.846, suggesting a possible upside. However, investors should also consider the possible downside price of $27.49. Given these factors, while there are potential gains to be made, investors should approach ConAgra Foods with caution and a well-considered strategy. .

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Editorial Staff

Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management. View Profile
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