Conagra Brands, Inc. (NYSE:CAG) is included among the 14 Best Mid-Cap Dividend Stocks to Buy Now. Morgan Stanley Sees Rising Competitive Pressure Weighing on Conagra (CAG) On January 16, Morgan Stanley analyst Megan Alexander Clapp lowered her price target on Conagra Brands, Inc. (NYSE:CAG) to $18 from $19, while keeping an Equal Weight rating on the shares. She said the outlook remains tough, calling it “an already challenging backdrop” for US food stocks. Morgan Stanley also warned that competitive pre ...

Group 1 - Conagra Brands, Inc. (CAG) previously had a hold rating due to concerns over margins affected by inflation and tariffs, but there are early signs of stabilization in the business [1] - The individual investor managing their own capital has a diverse investing background, utilizing fundamental, technical, and momentum investing strategies to enhance their investment process [1] Group 2 - No stock, option, or similar derivative positions are held in any of the companies mentioned, and there are no plans to initiate such positions in the near future [2] - The article expresses personal opinions and is not compensated beyond the platform used for publication [2]

Company Overview - Conagra Brands is a packaged food company with well-known brands such as Slim Jim, Healthy Choice, and Duncan Hines, but it lacks true category leaders [2] - The company is currently facing challenges, as indicated by a significant decline in stock price, down over 35% from its 52-week highs [1] Financial Performance - In the fiscal second quarter of 2026, Conagra's overall sales decreased by 6.8%, with organic sales down 3%, reflecting broader struggles in the consumer staples sector [3] - The company reported a one-time impairment charge of $0.94 per share, resulting in a loss of $1.39 per share [3][4] - The impairment charge suggests that the company's brands are not valued as highly as previously believed, impacting shareholders by reducing book value per share [4] Dividend Analysis - Conagra's current dividend yield stands at 8.2%, significantly higher than the average yield of 2.8% for consumer staples stocks [1][8] - The quarterly dividend of $0.35 per share was covered by adjusted earnings in the fiscal second quarter, but the dividend payout ratio has exceeded 100% for a concerning period [5][7] - The board has previously reduced dividends when payout ratios spiked, and the lack of dividend increases in recent years raises concerns about sustainability [7] Market Position and Comparison - The overall business position of Conagra is not among the best in the consumer staples sector, and it may struggle to improve given its brand portfolio [5] - For investors seeking reliable dividends, Conagra may not be the best option, especially when compared to better-positioned companies like PepsiCo, which has shown revenue growth and a more reliable dividend history [9][10]

Core Insights - The analyst has over a decade of experience researching various industries, including commodities and technology, which aids in providing valuable insights for readers [1] Group 1: Industry Focus - The analyst specializes in metals and mining stocks but is also knowledgeable in consumer discretionary/staples, REITs, and utilities [1] Group 2: Research Methodology - The transition from a personal blog to a value investing-focused YouTube channel has allowed the analyst to research hundreds of companies [1]

Group 1 - The article emphasizes the importance of evaluating food-and-beverage companies based on their alignment with changing consumer eating habits [1] - The author has managed investments since 1999, gaining insights through various market cycles, and focuses on uncovering mispriced assets [1] - A fundamentals-first approach is highlighted, despite the influence of sentiment and technical factors in today's algorithm-driven investment environment [1]

Core Insights - The rise of GLP-1 drugs is not just altering dietary habits but fundamentally reshaping the food and beverage industry, leading to a significant decline in consumer spending on traditional snacks and meals [1][3][28] Consumer Behavior Changes - Grocery budgets have decreased by 5.3% to 8.2% in six months, with higher-income households cutting spending by up to 8.6%, particularly impacting the snack aisle [2] - 66% of GLP-1 users have reduced their snacking frequency, with significant changes in taste and appetite reported by 85% of users [4][5] - The medications suppress hunger cravings, leading to a permanent demand destruction in traditional food categories [3][5] Industry Impact - KPMG forecasts a $48 billion annual reduction in food and beverage spending through 2034, indicating a long-term shift rather than a temporary dip [3] - Traditional food industry strategies, which rely on consumer cravings, are becoming obsolete as appetite suppression alters consumer behavior [4][5] Market Fragmentation - By 2030, 35% of U.S. households will include a GLP-1 user, leading to a bifurcated market where one segment seeks nutrient-dense options and the other continues traditional snacking [16][29] - The demand for protein snacks is projected to grow significantly, with the market expected to expand from $4.92 billion to $10.83 billion by 2035 [18] Company Performance - Companies like PepsiCo and Mondelez International are experiencing declines in snack volumes, with PepsiCo reporting five consecutive quarters of declining savory snack volume [9][10] - Hershey has acknowledged a significant year-over-year decline in net sales for salty snacks, indicating broader structural concerns in the industry [10] Strategic Adaptation - Leading companies are pivoting towards healthier, protein-rich products, with Nestlé launching a line of frozen meals designed for GLP-1 users [22] - Venture capital is increasingly flowing into health-focused food innovations, reflecting a shift towards nutrient-dense consumption rather than traditional snacking [25][26] Future Outlook - The companies that will thrive are those that adapt to the new consumer landscape shaped by GLP-1 drugs, focusing on intentional consumption rather than impulse-driven purchases [28][29]

Core Insights - Conagra Brands, Inc. (CAG) is experiencing a difficult environment characterized by a slowdown in consumer spending, elevated inflation, and tariffs, leading to a Zacks Rank of 5 (Strong Sell) and nearing a 5-year low [1] Financial Performance - In the second quarter of fiscal 2026, Conagra reported earnings of $0.45, beating the Zacks Consensus of $0.44, marking the second consecutive earnings beat [2] - Net sales decreased by 6.8%, with organic net sales down by 3.0%, although the company is optimistic about a return to net sales growth in the second half of the fiscal year [3] Guidance and Inflation - Conagra reaffirmed its fiscal 2026 guidance, expecting organic net sales to change by a loss of 1% to 1% compared to fiscal 2025, with earnings projected between $1.70 and $1.85 [4] - The company anticipates continued elevated costs of goods sold inflation, with total cost of goods inflation expected to reach 7% in fiscal 2026, influenced by U.S. tariffs increasing costs by 3% before mitigations [5] Analyst Revisions - Analysts have cut fiscal 2026 earnings estimates, with the Zacks Consensus falling to $1.72 from $1.75, indicating a 25.2% decline in earnings [6] - For fiscal 2027, estimates were also reduced, with the Zacks Consensus dropping to $1.79 from $1.86, reflecting a projected earnings growth of 4.2% [7] Stock Performance and Valuation - Conagra's shares have declined significantly over the past year, now near 5-year lows [10] - The company trades at a forward price-to-earnings (P/E) ratio of 9.6, suggesting it may be undervalued [12] Dividend Information - Conagra pays a dividend of $1.40 per share, yielding 8.5%, with dividends paid in the first half of fiscal 2026 remaining flat year over year at $335 million [13]

Core Insights - The U.S. frozen food market is valued at $93.5 billion and is being shaped by four key themes: protein-packed meals, restaurant-inspired favorites, family-style solutions, and all-day breakfast [1][2] Group 1: Emerging Trends - Protein remains the most influential nutrition attribute, with high-protein frozen foods generating $12 billion annually and growing at double-digit volume rates [5] - "Takeout-style" frozen foods total $14.3 billion in annual sales, driven by younger generations and families seeking restaurant-quality taste and convenience [5] - Multi-serve meals and frozen sides account for approximately $12 billion in sales, with value-size frozen products making up over 40% of frozen aisle sales [5] Group 2: Consumer Behavior - Consumers are increasingly relying on frozen foods to meet daily protein needs, with frozen meals averaging high protein levels per serving [5] - The trend of recreating restaurant experiences at home is growing, particularly as dining out becomes more expensive [5] - Breakfast items are being consumed throughout the day, with high-protein, ready-to-heat formats gaining popularity among Gen Z and Millennials [5]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: Company Ratings and Analyst Insights - B&G Foods Inc (NYSE:BGS) has a dividend yield of 18.07%. Barclays analyst Brandt Montour maintained an Equal-Weight rating and reduced the price target from $5 to $4, with an accuracy rate of 66%. Piper Sandler analyst Michael Lavery maintained a Neutral rating and cut the price target from $7 to $5, with an accuracy rate of 63%. Recent news includes the appointment of John Ozgopoyan as Executive Vice President of Sales [3][6] - Conagra Brands Inc (NYSE:CAG) has a dividend yield of 8.39%. Wells Fargo analyst Chris Carey maintained an Equal-Weight rating and lowered the price target from $20 to $19, with an accuracy rate of 60%. Stifel analyst Matthew Smith maintained a Hold rating and reduced the price target from $21 to $19, with an accuracy rate of 52%. The company reported quarterly earnings of 45 cents per share, exceeding the analyst consensus estimate of 44 cents [4][6] - Altria Group Inc (NYSE:MO) has a dividend yield of 7.11%. B of A Securities analyst Lisa Lewandowski maintained a Buy rating and raised the price target from $64 to $72, with an accuracy rate of 58%. Barclays analyst Gaurav Jain maintained an Underweight rating and increased the price target from $49 to $57, with an accuracy rate of 58%. Recent news includes the retirement of CEO Billy Gifford and the appointment of Sal Mancuso as his successor [5][6]

Group 1 - The article provides a market analysis of several food companies, including JM Smucker Company, Conagra Brands Inc, Hormel Foods Corporation, and Post Holdings Inc, highlighting their performance and market trends [1] Group 2 - JM Smucker Company is noted for its strong brand portfolio and recent financial performance, which may present investment opportunities [1] - Conagra Brands Inc is discussed in terms of its strategic initiatives and market positioning, indicating potential growth areas [1] - Hormel Foods Corporation's focus on innovation and product diversification is emphasized, suggesting resilience in a competitive market [1] - Post Holdings Inc is analyzed for its recent acquisitions and market expansion efforts, which could enhance its market share [1]