Conagra at Rock Bottom: 7% Yield & Turnaround Poised

Core Viewpoint - Conagra Brands is currently at a low stock price, presenting a potential buying opportunity for long-term investors, with expectations of returning to growth in FY2026 despite ongoing challenges in the consumer staples sector [1][10]. Financial Performance - In Q4 FY2025, Conagra reported a revenue decline of 4.3%, with an organic decline of 3.5%, influenced by divestitures, consumption trends, and foreign exchange headwinds [8][9]. - The organic decline was attributed to a 1% reduction in price realization and a 2.5% decline in volume, with the International segment experiencing a 13% decline due to M&A activity and FX headwinds [9]. - The forecast for FY2026 indicates revenue contraction will be offset by flat to slightly higher organic growth, supporting balance sheet health and dividend distributions [10]. Dividend Insights - Conagra offers a 7% dividend yield, which is considered safe for income investors, although there are risks associated with potential cuts in 2025 [5][11]. - The payout ratio for 2026 is projected at 80% relative to the 2025 payout, which is high but manageable given the free cash flow outlook [5][6]. Market Sentiment - Analysts have mixed views on Conagra, with price target reductions and downgrades impacting stock performance, yet the overall sentiment remains bullish with expectations for significant upside [12][13]. - Institutional investors own over 80% of Conagra's stock, providing a solid support base and showing buying activity throughout the year [11]. Stock Forecast - The 12-month stock price forecast for Conagra is $22.73, indicating a potential upside of 17.21% from the current price of $19.39 [8]. - Following recent price declines, analysts suggest that the stock is positioned for a rebound, potentially increasing by low-single to high-double digits, with a possibility of up to 30% if traction is gained in FY2026 [12][13].