Group 1 - Conagra Brands operates in the grocery retail and foodservice sectors, selling products under various brand names available in supermarkets, restaurants, and food service establishments [1] - The company has been navigating challenges such as inflationary pressures, supply chain disruptions, and shifting consumer behavior since 2020 [1] Group 2 - The analysis of Conagra Brands is part of a broader fundamental analysis of publicly listed companies, which includes firms like Covestro, Signify, Alibaba, Verizon, and China Mobile [1] - The expertise in accounting allows for thorough analysis of annual reports and financial information, which is crucial for assessing stock valuation [1]

Core Viewpoint - Conagra Brands, Inc. is set to complete the removal of certified Food, Drug & Cosmetic colors from its U.S. frozen product portfolio by the end of 2025, marking a significant milestone in its portfolio modernization strategy [1][2]. Group 1: Portfolio Modernization - The transition away from FD&C colors is part of a broader strategy to modernize the portfolio in alignment with consumer preferences [2]. - By the beginning of the 2026-2027 school year, Conagra will not offer products with FD&C colors sold to K-12 schools [2]. - The company aims to discontinue the use of FD&C colors across its entire U.S. retail portfolio by the end of 2027 [2]. Group 2: Consumer Trends and Product Innovation - Conagra has a history of adapting to evolving consumer interests, focusing on health and wellness, diverse lifestyles, and nutritional needs [3]. - The company emphasizes affordable, convenient nutrition, offering a variety of food groups including whole vegetables and portion-controlled frozen meals [3]. - Brands like Birds Eye and Healthy Choice support consumers' nutritional goals and healthy eating patterns [3]. Group 3: New Product Initiatives - Earlier in the year, Conagra launched the "On Track" badge on select Healthy Choice products, indicating high protein, low calorie, and good fiber content, making them "GLP-1 friendly" [4]. - Healthy Choice was the first major food brand to highlight "GLP-1 Friendly" on its packaging [4]. Group 4: Company Overview - Conagra Brands, Inc. is one of North America's leading branded food companies, with a history of over 100 years in quality food production [5]. - The company generated fiscal 2024 net sales of more than $12 billion [5].

Core Insights - Moretus Research provides high-quality equity research focused on U.S. public markets, aiming to deliver clarity, conviction, and alpha for serious investors [1] - The research methodology emphasizes a structured framework to identify companies with durable business models, mispriced cash flow potential, and intelligent capital allocation [1] - Valuation practices are based on sector-relevant multiples tailored to each company's business model and capital structure, prioritizing comparability and simplicity [1] Research Focus - Moretus Research targets underappreciated companies that are undergoing structural changes or temporary dislocations, where disciplined analysis can yield asymmetric returns [1] - The research combines rigorous fundamental analysis with a judgment-driven process, avoiding noise and overly complex forecasting [1] - The firm aims to elevate the standards of independent investment research by providing actionable insights and a strong filter for relevant information in equity analysis [1]

Core Insights - Conagra Brands, Inc. (CAG) has experienced an 11.9% decline in share price over the past three months, contrasting with a 1.1% decline in the industry, attributed to broader market dynamics and specific company challenges [1][8] - The stock has reached a 52-week low of $21.81, closing at $22.28, and is trading below key technical levels, indicating ongoing bearish pressure [3][8] Financial Performance - The Foodservice segment reported a 6.1% year-over-year decline in sales to $256 million, with organic sales down 6.3% due to a 10% drop in volumes, reflecting weak commercial traffic amid macroeconomic pressures [4] - The international segment saw a 17.6% year-over-year decline in net sales to $224 million, with foreign exchange headwinds contributing 8.5 percentage points to this decline [5] - Adjusted gross profit fell 19.1% to $704 million, and adjusted gross margin narrowed by 389 basis points to 24.8%, driven by inflation around 4% and unfavorable operating leverage [6][8] Earnings Outlook - For fiscal 2025, Conagra projects a 2% decline in organic net sales, with adjusted operating margin expected to decrease to 14.4% from 16% a year ago, and adjusted earnings per share (EPS) forecasted at $2.35, down from $2.67 [9][8] - The company reaffirmed its fiscal 2025 outlook despite acknowledging ongoing operational disruptions [9] Strategic Initiatives - Conagra is actively reshaping its portfolio to adapt to evolving consumer preferences, focusing on innovation, brand modernization, and strategic acquisitions while exiting low-growth businesses [10] - The company has a diverse portfolio across frozen, snacks, and staples, which positions it to capitalize on multiple consumer trends and mitigate risks from individual category fluctuations [11] Valuation - Conagra currently trades at a forward 12-month price-to-earnings ratio of 9.47X, below the industry average of 16.06X, suggesting it may be undervalued [12]

Core Insights - Conagra Brands is expanding its frozen food offerings with new single-serve and family-size meals, emphasizing convenience, taste, and value for consumers [1][4][13] - The company is introducing a variety of new products across its brands, including Healthy Choice, Marie Callender's, and P.F. Chang's, targeting different consumer preferences and dietary needs [3][4][6][9] Single-Serve Meals - Conagra's single-serve frozen meals include new offerings from brands like Banquet, Healthy Choice, and Marie Callender's, with prices ranging from $3.49 to $4.99 [2][3][4] - Notable new products include Dolly Parton's Southern-inspired meals and Mike's Hot Honey Chicken Mac 'N Cheese, highlighting the trend towards flavorful and convenient meal options [3][4] Family-Size Meals - The company is launching new family-size meals under the Marie Callender's brand, catering to households of two or more, with suggested retail prices around $9.99 [4] - These meals include classic comfort food recipes such as Chicken Alfredo and Chicken Parmesan, designed for easy preparation [4] Healthy and Plant-Based Options - Healthy Choice continues to lead in the better-for-you single-serve meals category, introducing globally inspired recipes priced between $3.49 and $4.99 [3][4] - The Gardein brand is expanding its plant-based offerings, including new frozen meals and breakfast items, catering to the growing demand for vegan and gluten-free options [9][10][11] Vegetable Offerings - Birds Eye is launching new vegetable products, including Ultimate Cheesy & Buttery Vegetables, which feature enhanced flavors and convenience for consumers [5][7] - The new Steamfresh vegetable medleys reflect the trend towards incorporating global cuisines into frozen vegetable options, with suggested retail prices around $2.49 [8] Market Position - Conagra Brands generated over $12 billion in net sales for fiscal 2024, positioning itself as a leading player in the North American branded food market [13]

Investment Rating - The report indicates a solid total food sales growth of +2.8%/+3.2% year-over-year for the latest 4 weeks and 12 weeks, aligning with the long-term trend of low single-digit growth [1][6]. Core Insights - Total food sales growth is primarily driven by pricing, although there is a noted decline in volumes across most packaged food categories, with HSY being an exception due to pricing support [1][9]. - All companies within the coverage have lost market share in their top categories, indicating competitive pressures [1][10]. Department & Category Detail - Total food sales increased by +2.8% year-over-year in the latest 4 weeks, with private label products leading in most categories [2]. - Total equivalent (EQ) units decreased by -0.5% year-over-year, with branded products slightly outperforming private label products [2][5]. - Yogurt and packaged coffee showed the highest sales growth at +13.5% and +13.4% year-over-year, respectively, with private label sales growth strongest in snack/variety packs, meal combos, and packaged coffee [5][7]. Company Performance - CAG reported a sales decline of -1% year-over-year, driven by lower prices, while volumes remained flat [9]. - GIS experienced a -2% year-over-year sales decline, attributed to lower volumes [10]. - HSY saw a sales increase of +5% year-over-year, supported by higher prices and volumes [11]. - K reported a -3% year-over-year sales decline, primarily due to lower volumes [12]. - KHC's sales declined by -4% year-over-year, with lower volumes impacting performance [13]. - MDLZ reported a -1% year-over-year sales decline, driven by lower prices [14]. - SFD experienced a -1% year-over-year sales decline, although packaged lunchmeat showed strong growth [15].

Group 1 - Conagra Brands, Inc. will release its fiscal 2025 fourth quarter and full year results on July 10, 2025, followed by a live Q&A session with the investment community [1] - The live audio Q&A can be accessed via a dedicated phone line for U.S. and international participants, with a passcode required for entry [2] - Conagra Brands is a leading branded food company in North America, with a portfolio that includes well-known brands such as Birds Eye®, Duncan Hines®, and Healthy Choice® [3] Group 2 - The company generated net sales of over $12 billion in fiscal 2024, indicating a strong market presence [3] - Conagra Brands emphasizes innovation and collaboration to meet changing consumer food preferences [3] - The company is headquartered in Chicago and has a 100-year history in the food industry [3]

Core Insights - Conagra Brands, Inc. has agreed to sell its Van de Kamp's® and Mrs. Paul's® frozen seafood brands to High Liner Foods for $55 million in cash, which includes all associated intellectual property and inventory [1][2] - The divested brands contributed approximately $75 million to Conagra's fiscal year 2024 net sales, and the sale is expected to have a ($0.01) impact on fiscal year 2026 adjusted earnings per share [1][2] - The transaction is anticipated to close by the end of July 2025, with proceeds aimed at reducing the company's debt [1] Company Strategy - The divestiture is part of Conagra's strategy to reshape its portfolio and focus on core frozen offerings, as stated by the CEO Sean Connolly [2] - Van de Kamp's and Mrs. Paul's are recognized as leading brands in the U.S. frozen breaded and battered seafood category, providing various products for snacks and meals [2] Company Overview - Conagra Brands, Inc. is a leading branded food company in North America, with a history of over 100 years and a focus on innovation and collaboration [3] - The company's portfolio includes well-known brands such as Birds Eye®, Duncan Hines®, and Healthy Choice®, and it generated over $12 billion in net sales for fiscal 2024 [3]

Core Insights - Conagra Brands, Inc. (CAG) is currently trading at a forward 12-month price-to-earnings ratio of 9.68X, significantly below the industry average of 16.03X and the S&P 500's average of 21.88X, indicating potential undervaluation and an attractive investment opportunity [1] - CAG's Value Score is currently rated A, further supporting its attractiveness to investors [1] Financial Performance - CAG's shares have declined by 9.4% over the past three months, while the industry and S&P 500 have seen declines of 3% and 0.9%, respectively [4] - The stock is currently priced at $23.01, close to its 52-week low of $22.38, which may appeal to value-focused investors [4] Growth Strategy - Conagra is actively reshaping its portfolio to align with evolving consumer preferences, focusing on innovation, brand modernization, and strategic acquisitions and divestitures [5] - The company has exited low-growth businesses and is strengthening its presence in key categories [5] Market Position - CAG's diverse portfolio across frozen foods, snacks, and staples allows it to capitalize on various consumer trends while reducing risks from category fluctuations [6] - In the third quarter of fiscal 2025, CAG reported strong consumer demand across its brands, despite facing temporary supply constraints [6] Segment Performance - The snacking segment is a key growth driver, with volumes increasing by 4% in the fiscal third quarter, supported by high-demand subcategories like seeds, meat snacks, and popcorn [7] - However, the Foodservice unit has faced challenges, with sales dropping 6.1% year over year to $256 million, reflecting broader industry pressures [8] International Exposure - CAG's International segment experienced a 17.6% decline in net sales year over year to $224 million, primarily due to adverse currency fluctuations [9] Cost Pressures - Sustained cost inflation, approximately 4% in the fiscal third quarter, has negatively impacted profitability, leading to a 19.1% decline in adjusted gross profit to $704 million [10] - The adjusted gross margin contracted by 389 basis points to 24.8%, with expectations of some margin improvement in the fiscal fourth quarter, though not sufficient to fully offset cost pressures [10] Investment Outlook - CAG's focused brand investments and strong presence in high-growth categories position it for long-term growth, despite near-term challenges such as foodservice segment weakness and cost inflation [13]

Industry Overview - The Zacks Food-Miscellaneous industry is facing challenges due to inflation impacting consumer spending and a shift towards private-label food alternatives [1][4] - Rising input costs and operational expenses are pressuring profit margins across the sector [1][5] - The industry includes companies that manufacture a variety of food products, including cereals, sauces, spices, and frozen items, sold through various distribution channels [3] Major Trends - Consumers are increasingly favoring cost-effective food options, leading to a decline in foodservice performance and softened sales volumes for major brands [4] - Companies are responding by implementing value-driven marketing strategies and expanding affordable food offerings [4] - Established brands are leveraging customer loyalty and innovation to maintain market position, with a focus on healthier product options [6] Cost Pressures - Rising prices of key ingredients and increased labor, packaging, and transportation costs are straining profit margins [5] - Companies are investing in performance improvements and efficiency upgrades, which, while essential for long-term success, contribute to near-term financial challenges [5] - Global trade tensions and tariffs are further increasing input costs, particularly for imported raw materials [5] Industry Performance - The Zacks Food-Miscellaneous industry has underperformed the S&P 500 and the broader Zacks Consumer Staples sector over the past year, declining 14.2% compared to the S&P 500's growth of 11.2% [10] - The industry's current Zacks Industry Rank is 155, placing it in the bottom 37% of over 250 Zacks industries, indicating bleak near-term prospects [7][8] Current Valuation - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 15.97X, lower than the S&P 500's 21.37X and the sector's 17.39X [13] - Over the past five years, the industry has traded between 14.47X and 20.75X, with a median of 17.63X [13] Company Highlights - Mondelez International, Inc. (MDLZ) is focusing on its core snacking categories and has seen a 3.8% increase in the consensus EPS estimate to $3.01 [16][17] - The Kraft Heinz Company (KHC) aims to unlock $2.5 billion in gross efficiencies by 2027 and has seen a slight decline in its EPS estimate to $2.57 [20][21] - McCormick & Company, Incorporated (MKC) is enhancing operating margins through its Comprehensive Continuous Improvement program, with an unchanged EPS estimate of $3.05 [23][25] - Conagra Brands, Inc. (CAG) is focusing on premium products and has maintained its EPS estimate at $2.34, despite a 25% decline in shares over the past year [26][29]