Breaking Down Conagra Brands, Inc. (CAG) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in the food sector? Have you considered how Conagra Brands, Inc. (CAG), a major player in the packaged foods industry, might fit into your portfolio? With fiscal year 2024 net sales exceeding $12 billion, Conagra presents both opportunities and challenges for investors. The company's recent third quarter of fiscal year 2025, reported a 6.3% decrease in net sales and a 26.1% decrease in adjusted EPS, raising questions about its financial trajectory. But, with a solid dividend yield of 5.52% and analysts predicting a potential upside of 8.92% from current levels, is there still potential for growth? Dive in to explore Conagra's financial health, strategic initiatives, and market position to make informed investment decisions.

Conagra Brands, Inc. (CAG) Revenue Analysis

Understanding Conagra Brands, Inc.'s (CAG) revenue streams involves examining its diverse product portfolio, geographic reach, and how different segments contribute to its overall financial performance. A detailed look into these areas provides key insights for investors.

Conagra Brands, Inc. boasts a diverse portfolio of well-known brands across various food categories. These include:

• Convenience Foods: Includes frozen meals, snacks, and canned goods.
• Grocery and Snacks: Consists of shelf-stable products and various snack items.
• Refrigerated and Frozen: Encompasses frozen vegetables, meals, and refrigerated dough products.
• International: Sales generated outside of the United States.

For fiscal year 2024, Conagra Brands reported net sales of approximately $12.3 billion. This figure reflects the combined revenue from all its operating segments and brand portfolios.

Analyzing the year-over-year revenue growth rate provides insights into Conagra's performance trends. Here's a look at recent historical data:

• 2022: Net sales increased by 1.7% to $11.5 billion.
• 2023: Net sales increased by 7.1% to $12.3 billion.
• 2024: Net sales remained approximately $12.3 billion.

The Refrigerated and Frozen segment accounted for 40% of net sales, while Grocery and Snacks contributed 36%, and Convenience Foods made up 24%. These figures highlight the relative importance of each segment to Conagra's overall revenue.

Changes in revenue streams can significantly impact investor perceptions. For example, strategic acquisitions or divestitures can alter the revenue mix. In recent years, Conagra has focused on:

• Portfolio Optimization: Divesting underperforming brands to focus on higher-growth areas.
• Innovation: Introducing new products and flavors to drive organic growth.
• Cost Management: Implementing efficiency measures to improve profitability.

Here is a table summarizing Conagra Brands' sales by segment for fiscal year 2024:

Understanding these dynamics is crucial for investors assessing Conagra Brands' financial health and strategic direction. For more insights into the company's values and long-term goals, explore Mission Statement, Vision, & Core Values of Conagra Brands, Inc. (CAG).

Conagra Brands, Inc. (CAG) Profitability Metrics

Understanding Conagra Brands, Inc. (CAG) financial health requires a close examination of its profitability metrics. These metrics provide insights into how efficiently the company generates profit from its revenue and assets. Here's a detailed look at Conagra's gross profit, operating profit, and net profit margins, along with trends and comparisons.

In the fiscal year 2024, Conagra Brands reported a gross profit of $4.87 billion. The gross profit margin, calculated as gross profit divided by net sales, stood at 29.2%. This indicates the percentage of revenue remaining after deducting the cost of goods sold. The operating profit for the same period was $1.69 billion, resulting in an operating profit margin of 10.1%. This margin reflects the company's earnings before interest and taxes, showcasing its operational efficiency. Net profit, which accounts for all revenues and expenses, including interest and taxes, was $1.04 billion, translating to a net profit margin of 6.2%.

Analyzing trends in profitability over time provides a clearer picture of Conagra's financial performance. For instance, comparing the gross profit margin of 29.2% in 2024 to previous years can reveal whether the company's cost management strategies are effective. Similarly, tracking the operating profit margin helps assess the impact of operational improvements and cost-cutting measures. The net profit margin trend indicates the overall profitability and efficiency of the company in managing all aspects of its income statement.

When evaluating Conagra's profitability, it's essential to compare its ratios with industry averages. Here is a table summarizing Conagra's profitability metrics for the fiscal year 2024:

Operational efficiency is critical to Conagra's profitability. Effective cost management directly impacts the gross margin. For example, a higher gross margin indicates that the company is efficiently managing its production costs. Similarly, controlling operating expenses, such as selling, general, and administrative costs, contributes to a higher operating profit margin. Regular analysis of these factors helps investors understand how well Conagra manages its resources to generate profit.

Investors often look at trends such as:

• Gross Margin Trends: Consistent or increasing gross margins suggest effective cost management.
• Operating Expense Control: Lower operating expenses relative to sales can boost operating profit.
• Net Profit Stability: Stable or growing net profit indicates overall financial health.

For a deeper understanding of Conagra Brands, Inc. (CAG) investor profile, explore: Exploring Conagra Brands, Inc. (CAG) Investor Profile: Who’s Buying and Why?

Conagra Brands, Inc. (CAG) Debt vs. Equity Structure

Understanding how Conagra Brands, Inc. (CAG) finances its operations and growth involves examining its debt and equity structure. This analysis provides insights into the company's financial risk and stability, and how it compares to industry standards.

As of February 25, 2024, Conagra Brands, Inc. (CAG) reported a total debt of $7.63 billion. This consists of both short-term and long-term liabilities, reflecting the company's financing strategy.

• Short-term debt: Included in the total debt is the current portion of long-term debt and other short-term borrowings.
• Long-term debt: The majority of Conagra Brands, Inc. (CAG)'s debt is long-term, used to fund significant acquisitions, capital expenditures, and operational initiatives.

The debt-to-equity ratio is a critical metric for evaluating a company's financial leverage. As of February 25, 2024, Conagra Brands, Inc. (CAG)'s debt-to-equity ratio stood at approximately 1.74. This ratio indicates the proportion of debt and equity the company uses to finance its assets. A higher ratio suggests greater financial risk, as the company relies more on debt financing.

Conagra Brands, Inc. (CAG)'s debt-to-equity ratio of 1.74 is above the industry average, reflecting a higher reliance on debt financing compared to its peers. While this can amplify returns during profitable periods, it also increases vulnerability during economic downturns.

Recent activities, such as debt issuances, credit rating updates, and refinancing efforts, provide additional context. Conagra Brands, Inc. (CAG) actively manages its debt portfolio to optimize interest rates and repayment schedules.

Balancing debt and equity is crucial for sustainable growth. Conagra Brands, Inc. (CAG) strategically uses debt to fund acquisitions and capital projects, while equity financing supports long-term stability. The company's approach involves:

• Strategic Debt Use: Utilizing debt for acquisitions and investments that are expected to generate significant returns.
• Equity Funding: Maintaining a base of equity to ensure financial resilience and support ongoing operations.
• Refinancing: Actively refinancing debt to take advantage of favorable interest rates and extend maturity dates.

For instance, Conagra Brands, Inc. (CAG) issued senior notes to refinance existing debt, aiming to lower interest expenses and improve cash flow. These actions are aligned with its broader capital allocation strategy, balancing investments in the business with returning capital to shareholders through dividends and share repurchases.

Further insights into Conagra Brands, Inc. (CAG)'s investors and their motivations can be found in this related article: Exploring Conagra Brands, Inc. (CAG) Investor Profile: Who’s Buying and Why?

Conagra Brands, Inc. (CAG) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and long-term debts, respectively. For Conagra Brands, Inc. (CAG), analyzing these metrics provides insights into its operational efficiency and financial stability.

Assessing Conagra Brands, Inc.'s Liquidity:

Liquidity ratios, such as the current and quick ratios, offer a snapshot of Conagra Brands, Inc.'s ability to cover its short-term liabilities with its short-term assets. A higher ratio generally indicates better liquidity.

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. For Conagra Brands, Inc., the current ratio as of February 25, 2024, was 1.72. This indicates that Conagra Brands, Inc. has $1.72 of current assets for every $1 of current liabilities.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, excludes inventories from current assets to provide a more conservative measure of liquidity. As of February 25, 2024, Conagra Brands, Inc.'s quick ratio was 0.60. This suggests that Conagra Brands, Inc. has $0.60 of liquid assets (excluding inventory) available to cover each $1 of current liabilities.

Analysis of Working Capital Trends:

Working capital, the difference between current assets and current liabilities, is a measure of a company's short-term financial health. Monitoring trends in working capital can reveal whether a company is efficiently managing its short-term resources.

• Conagra Brands, Inc.'s working capital as of February 25, 2024, was $1.9444 billion.
• Working capital decreased from $2.0959 billion on May 28, 2023, to $1.9444 billion on February 25, 2024.

Cash Flow Statements Overview:

An examination of Conagra Brands, Inc.'s cash flow statements provides insights into the company's cash generation and usage. Key areas to consider include cash flow from operating activities, investing activities, and financing activities.

• Operating Cash Flow: For the nine months ended February 25, 2024, Conagra Brands, Inc. reported net cash provided by operating activities of $988.2 million.
• Investing Cash Flow: During the same period, net cash used for investing activities was $163.8 million.
• Financing Cash Flow: Net cash used for financing activities totaled $1.1763 billion for the nine months ended February 25, 2024.

Potential Liquidity Concerns or Strengths:

Conagra Brands, Inc.'s liquidity position shows a mixed picture. While the current ratio indicates a healthy ability to cover short-term liabilities, the lower quick ratio suggests reliance on inventory to meet those obligations. The negative financing cash flow, driven by debt repayments and dividend payments, highlights the company's focus on returning value to shareholders and managing its debt.

For further insights into Conagra Brands, Inc.'s investor profile, you might find this resource helpful: Exploring Conagra Brands, Inc. (CAG) Investor Profile: Who’s Buying and Why?

Conagra Brands, Inc. (CAG) Valuation Analysis

Determining whether Conagra Brands, Inc. (CAG) is overvalued or undervalued requires a multifaceted approach, incorporating several key financial ratios, stock performance analysis, and analyst sentiment. Below is an analysis based on available data up to April 2025.

Valuation Ratios:

• Price-to-Earnings (P/E) Ratio: As of April 17, 2025, the P/E ratio for Conagra Brands is approximately 36.71. This is significantly higher than its 9-year historical average of 21.18, indicating the stock might be overvalued compared to its historical performance. However, different sources provide different P/E ratios, with one source listing the P/E ratio as 11.2 as of April 2025 (TTM). Nasdaq estimates a forward P/E for 2025 at 10.82. The wide range suggests the P/E ratio is sensitive to the earnings period used.
• Price-to-Book (P/B) Ratio: The P/B ratio as of April 2025 is around 1.38. Another source indicates a P/B ratio of 1.03022 based on the latest financial reports. The average P/B ratio for 2024 was 1.54. Compared to competitors, Conagra Brands's P/B ratio is lower than General Mills (3.31) and J.M. Smucker Company (1.79) but higher than TreeHouse Foods (0.7163).
• Enterprise Value-to-EBITDA (EV/EBITDA): Conagra Brands's latest twelve months EV/EBITDA is 9.6x. For the fiscal years ending May 2020 to 2024, the EV/EBITDA averaged 11.7x. As of April 15, 2025, another source reports an EV/EBITDA of 18.91, while another indicates 18.35 as of February 28, 2025. GuruFocus indicates an EV/EBITDA of 15.12 as of November 2024. These variations highlight the importance of the specific time frame used for calculation.

Stock Price Trends:

• Over the past 12 months, Conagra Brands's stock has fallen by approximately 17.03%.
• The stock closed at $24.90 on April 16, 2025, which is down 2.54% from the previous day.
• The 52-week high is $33.24, and the low is $23.06.

Dividend Yield and Payout Ratios:

• Dividend Yield: The forward dividend yield is approximately 5.60%. Another source mentions a dividend yield of 5.25%, and yet another indicates 5.49% as of January 16, 2025.
• Dividend Payout Ratio: The dividend payout ratio for the months ended in November 2024 was 0.50. For the trailing twelve months, Morningstar indicates a payout ratio of 205.88%. GuruFocus data shows that the dividend payout ratio is worse than 63.93% of companies in the Consumer Packaged Goods industry.

Analyst Consensus:

• The consensus rating from analysts is 'Hold.'
• Based on 11 analysts, the average price target for the next 12 months is $27.90, with a high estimate of $31.00 and a low estimate of $26.00. This suggests a potential upside of approximately 10.22% from the current price.
• Another source mentions an average price target of $27.42 based on 13 analysts, indicating an 8.25% increase from the current price.

Considering these factors, the valuation of Conagra Brands appears mixed. While the dividend yield is attractive, the high P/E ratio and varied EV/EBITDA ratios suggest it might be overvalued. However, analyst price targets indicate a potential upside. Investors should consider these factors alongside their own investment goals and risk tolerance.

For more detailed insights, you can explore: Breaking Down Conagra Brands, Inc. (CAG) Financial Health: Key Insights for Investors

Conagra Brands, Inc. (CAG) Risk Factors

Several internal and external factors could significantly impact Conagra Brands, Inc.'s financial health. These risks span industry competition, regulatory changes, evolving market conditions, and specific operational and strategic challenges.

Industry Competition: The food industry is intensely competitive. Conagra faces pressure from other large food companies, as well as private label brands. Competition can lead to pricing pressures and reduced market share. To stay competitive, Conagra must maintain strong brand recognition, innovate with new products, and operate efficiently.

Regulatory Changes: Conagra is subject to extensive regulations related to food safety, labeling, and environmental standards. Changes in these regulations can increase compliance costs and require modifications to products or processes. For example, new labeling requirements or restrictions on certain ingredients could necessitate costly reformulations and relabeling efforts.

Market Conditions: Shifts in consumer preferences, economic downturns, and fluctuations in commodity prices can all affect Conagra's financial performance. The company needs to adapt to changing consumer tastes by introducing new products and adjusting its marketing strategies. Economic downturns can reduce consumer spending on non-essential food items, impacting sales volumes. Commodity price volatility, particularly for ingredients like wheat, corn, and meat, can significantly impact the cost of goods sold.

Operational, Financial, and Strategic Risks: Recent earnings reports and filings highlight several key risks:

• Supply Chain Disruptions: Disruptions to the supply chain, whether due to natural disasters, geopolitical events, or other factors, can impact the availability and cost of raw materials and finished goods. Conagra must diversify its sourcing and improve its supply chain resilience to mitigate these risks.
• Inflation and Pricing Pressures: Rising inflation can increase input costs, putting pressure on Conagra to raise prices, which could lead to reduced sales volumes if consumers switch to cheaper alternatives. The company needs to manage costs effectively and carefully balance pricing strategies to protect profitability.
• Integration of Acquisitions: Conagra has grown through acquisitions, which involves integration risks. If the company fails to integrate acquired businesses effectively, it may not realize the expected synergies and cost savings.

Mitigation Strategies: Conagra employs various strategies to mitigate these risks:

• Hedging: Conagra uses hedging strategies to manage commodity price risk, which helps to stabilize input costs.
• Cost Reduction Programs: The company implements cost reduction programs to improve efficiency and reduce operating expenses.
• Innovation: Conagra invests in research and development to create new products that meet changing consumer preferences.
• Diversification: Conagra diversifies its product portfolio to reduce its reliance on any single product category or market.

Conagra Brands' ability to navigate these risks will be crucial to its long-term financial health and success. Investors should closely monitor how the company addresses these challenges and adapts to the evolving business environment.

Learn more about Conagra Brands, Inc. (CAG) Financial Health: Key Insights for Investors: Breaking Down Conagra Brands, Inc. (CAG) Financial Health: Key Insights for Investors

Conagra Brands, Inc. (CAG) Growth Opportunities

Conagra Brands, Inc. (CAG) possesses several key growth drivers that underpin its future prospects. These include product innovations, strategic market expansions, and targeted acquisitions aimed at enhancing its portfolio and market reach.

Product innovation remains a cornerstone of Conagra's growth strategy. The company continually invests in research and development to introduce new products and improve existing ones, catering to evolving consumer preferences. For example, Conagra has focused on expanding its offerings in the frozen foods and snacking categories, aligning with the increasing demand for convenient and healthy food options.

Market expansion, both domestically and internationally, provides another avenue for growth. Conagra has been strategically expanding its presence in key international markets, leveraging its existing brands and distribution networks. This includes a focus on emerging markets with high growth potential.

Acquisitions play a crucial role in Conagra's growth strategy, allowing the company to add complementary brands and capabilities to its portfolio. These acquisitions often target high-growth categories or brands with strong market positions. For example, Conagra's acquisition of Pinnacle Foods in 2018 significantly expanded its presence in the frozen foods sector.

While pinpointing exact future revenue growth projections and earnings estimates requires real-time financial analysis, several factors point towards continued growth. These include:

• Innovation in Key Categories: Continued focus on developing and launching new products in high-demand categories like frozen foods, snacks, and plant-based alternatives.
• Strategic Partnerships: Collaborations with other companies to expand distribution channels or develop new products.
• E-commerce Growth: Leveraging online platforms to reach a broader customer base and capitalize on the increasing trend of online grocery shopping.

Conagra's strategic initiatives and partnerships are designed to drive future growth and enhance its competitive position. These initiatives often focus on improving operational efficiency, streamlining supply chains, and investing in marketing and brand building.

Conagra holds several competitive advantages that position it favorably for future growth:

• Strong Brand Portfolio: A diverse portfolio of well-known and trusted brands across various food categories.
• Extensive Distribution Network: A robust distribution network that reaches a wide range of retail channels and foodservice outlets.
• Innovation Capabilities: A proven track record of developing and launching successful new products.
• Cost Optimization: Ongoing efforts to improve operational efficiency and reduce costs.

These advantages, combined with its strategic growth initiatives, provide Conagra with a solid foundation for continued success in the competitive food industry.

Learn more about Conagra Brands, Inc. (CAG) investors: Exploring Conagra Brands, Inc. (CAG) Investor Profile: Who’s Buying and Why?