With a market cap of $8.5 billion, Conagra Brands, Inc. (CAG) is a leading consumer packaged foods company headquartered in Chicago, Illinois. Its diversified portfolio spans more than 70 well-known brands, including Birds Eye, Duncan Hines, Slim Jim, Healthy Choice, and Reddi-Wip, with operations across grocery, snacks, frozen, refrigerated, international, and foodservice channels serving both retail and commercial customers. Companies worth between $2 billion and $10 billion or more are typically class ...

Core Insights - Thompson, Siegel, and Walmsley (TSW) has increased its stake in Conagra Brands, making it the 7th-largest holding in their portfolio, with a total position of 5,269,532 shares valued at $96.48 million as of the end of the third quarter [1][2]. Company Overview - Conagra Brands is a leading North American packaged foods company with a diversified product lineup and strong brand portfolio [6]. - The company reported a trailing twelve months (TTM) revenue of $11.45 billion and a net income of $850.10 million, with a dividend yield of 8.13% [4]. Recent Performance - As of December 1, 2025, Conagra Brands shares were priced at $17.22, reflecting a 33% decline over the prior year and underperforming the S&P 500 by 49 percentage points [3]. - The stock is currently trading at 0.7 times sales, the lowest since 2015, and at 7 times free cash flow, close to its lowest in the last two decades [11]. Investment Rationale - TSW's investment in Conagra aligns with a value investing strategy, as the company is seen as stable despite declining sales growth rates and challenges from GLP-1 medicines impacting food companies [10]. - The company holds $7.5 billion in long-term debt against a market capitalization of $8.2 billion, necessitating continued debt repayment to ensure the safety of its high-yield dividend and overall company longevity [12]. Product Portfolio - Conagra offers a broad portfolio of branded packaged foods, including frozen meals, snacks, and shelf-stable grocery products under well-known brands such as Birds Eye, Duncan Hines, Healthy Choice, and Slim Jim [9]. - The company generates revenue primarily through the manufacturing and distribution of consumer food products across various channels, leveraging scale and brand recognition [9].

Core Viewpoint - Conagra Brands, Inc. is facing significant stock underperformance despite a strong market position and positive quarterly results, with ongoing challenges from inflation and tariffs impacting future earnings expectations [1][2][4]. Company Overview - Conagra Brands has a market capitalization of $8.2 billion and operates in the North American packaged foods sector with a diverse brand portfolio including Birds Eye, Healthy Choice, Slim Jim, Reddi-wip, and Marie Callender's [1]. - The company operates across four segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice, focusing on innovative food products that cater to changing consumer preferences [1]. Stock Performance - Over the past 52 weeks, Conagra's stock has decreased by 41.1%, significantly underperforming the S&P 500 Index, which has increased by 18.5% during the same period [2]. - Year-to-date, the stock is down 38.3%, while the S&P 500 has risen by 15.1% [2]. Recent Financial Results - On October 1, Conagra reported Q1 2026 revenue of $2.63 billion and adjusted EPS of $0.39, exceeding expectations [4]. - The company has maintained its annual forecasts despite facing inflation and tariff pressures, indicating confidence in its pricing actions and cost-saving initiatives to offset rising costs [4]. Earnings Expectations - For the fiscal year ending in May 2026, analysts project a 23.5% year-over-year decrease in adjusted EPS to $1.76 [5]. - Conagra's earnings surprise history is mixed, with two beats and two misses in the last four quarters [5]. Analyst Ratings - Among 17 analysts covering Conagra, the consensus rating is a "Hold," with two "Strong Buy," 13 "Holds," one "Moderate Sell," and one "Strong Sell" [5]. - Morgan Stanley has set a price target of $21, with a mean price target of $20.53 indicating a nearly 20% premium to current levels, while the highest target of $27 suggests a potential upside of 57.8% [6].

Core Insights - The consumer goods sector is currently facing pressure due to macroeconomic concerns, but many stocks are oversold, presenting potential investment opportunities [2][3] Group 1: Conagra Brands - Conagra Brands is a packaged foods company known for brands like Duncan Hines and Healthy Choice, facing negative sentiment due to inflation, low growth, and high debt [5] - The company trades at a forward P/E ratio of 10.9, which is lower than peers like General Mills at 13.8, indicating potential for valuation improvement [6] - Conagra offers a forward dividend yield of 7.5%, providing steady returns while awaiting a turnaround [6][8] Group 2: Keurig Dr. Pepper - Keurig Dr. Pepper is under market pressure due to concerns over its $18 billion acquisition of JDE Peet's and subsequent plans to split into two companies [9] - The transaction is seen as complex but has the potential to unlock and create value, with the stock trading at less than 12 times forward earnings, a discount compared to industry peers [10]

Consumer Sentiment & Economic Outlook - Lower-income consumers are facing challenges due to rising costs, leading to value-seeking behavior [2][3] - Kagra's management expressed a downbeat view on consumer sentiment and households' ability to handle rising costs [2] - The economy is described as a "barbell economy," with a divide between upper-income spenders and lower-income consumers [3][4] - Consumer confidence is divided based on stock ownership, with stockholders feeling fine and non-stockholders feeling stressed [8][9] Company Performance & Strategy (Kagra) - Kagra caters to lower-income consumers through its frozen food and snacks businesses [4] - Kagra faces challenges due to rising commodity prices (turkey, beef, pork) and tariffs on packaging, steel, and aluminum, resulting in a 7+% increase in costs [4] - Kagra's frozen food business is growing, while its snack business shows mixed results, with beef jerky (Slim Jim) sales rising 4% [5][6] - Kagra is focusing on providing value to customers, especially lower-income consumers, by offering affordable meal options (around $6) and snacks (Slim Jim for $150) [9][10] - Kagra would offer more premium products if the lower-income consumer was healthier, but is currently focusing on value-seeking customers [10] Investment Perspective - Consumer product and food stocks are considered cheap with generous dividend yields due to commodity and volume pressure, making them attractive in a highly valued market [7] - Staples are seen as poised for a turnaround [7]

Core Insights - Conagra Brands, Inc. reported earnings per share of $0.39, exceeding the estimated $0.33, with revenue of approximately $2.63 billion, surpassing the estimated $2.62 billion [1][3] Financial Performance - The company achieved a 5.8% decrease in net sales but managed to surpass Wall Street's expectations for first-quarter sales due to strong demand for pantry staples [2][4] - Conagra's price-to-earnings (P/E) ratio is 7.60, indicating a relatively low valuation compared to its earnings, while the price-to-sales ratio is 0.75 [4] - The enterprise value to sales ratio is 1.46, and the enterprise value to operating cash flow ratio is 10.05, reflecting the company's valuation relative to its sales and operating cash flow [5] Strategic Execution - Conagra has made progress in top-line performance and strategic execution, achieving key supply chain objectives and reducing net debt [2][4] - CEO Sean Connolly emphasized disciplined execution and balanced capital allocation as key factors in the company's performance [4] Market Position - Conagra is a significant player in the packaged foods industry, competing with major companies like General Mills and Kraft Heinz [3]

Core Insights - Conagra Brands Inc. reported first-quarter fiscal 2026 results that exceeded Wall Street expectations but showed year-over-year declines in key metrics [1][2] Financial Performance - The company achieved net sales of $2.63 billion, a decrease of 5.8% compared to the prior-year period, while adjusted earnings per share were 39 cents, down 26.4% [2] - Wall Street analysts had anticipated net sales of $2.62 billion and earnings of 33 cents per share [3] Sales Breakdown - The decline in net sales was attributed to a 5.1% impact from mergers and acquisitions, a 0.6% drop in organic sales, and a minor 0.1% foreign exchange effect [3] - Within organic sales, a 0.6% price/mix benefit was more than offset by a 1.2% decline in volume [4] Segment Performance - Grocery & Snacks revenue fell 8.7% to $1.1 billion, with a 1.0% decline in organic net sales [6] - Refrigerated & Frozen sales decreased 0.9% to $1.1 billion, but organic net sales rose 0.2% due to a 0.5% increase in volume [6] - International segment revenue declined 18% to $212 million, with organic net sales down 3.5% [7] - Foodservice sales dipped 0.8% to $264 million, while organic net sales rose 0.2% [7] Cash Position - Conagra reported cash and cash equivalents of $698.1 million at the end of the first quarter of fiscal 2026 [4] Management Commentary - The CEO highlighted successful supply chain objectives and a focus on disciplined execution amid ongoing inflationary pressures and cautious consumer sentiment [5] Outlook - For fiscal 2026, the company reaffirmed guidance, projecting organic net sales growth between -1% and 1%, an adjusted operating margin of 11.0%–11.5%, and adjusted EPS of $1.70–$1.85 [8]

Financial Data and Key Metrics Changes - The fiscal first quarter results exceeded expectations, with a net debt reduction of over $400 million compared to the previous year [30] - The company is on track to pay down $700 million in debt for fiscal 2026, supported by divestitures and cash flow from operations [27][30] - Overall inflation guidance remains slightly above 7%, with core inflation pressures primarily from animal proteins [20][96] Business Line Data and Key Metrics Changes - Frozen business is expected to regain momentum after service interruptions, with innovations like Dolly Parton frozen meals performing well [41][42] - The company experienced a shift in promotional events, impacting sales timing, but anticipates a return to growth in frozen and snacks categories [7][14] - The company reported a 3% growth in frozen business in Q2 of the previous year, indicating potential for recovery [39] Market Data and Key Metrics Changes - The company noted a low single-digit decline in consumption trends for the second quarter, attributed to timing shifts in promotional events [5][6] - Retailers are returning to pre-COVID promotional levels, which is expected to support volume growth [81] Company Strategy and Development Direction - The company is focusing on driving volume in frozen and snacks while maximizing cash through inflation-justified pricing [8][68] - There is an emphasis on innovation and marketing to attract value-seeking consumers, particularly in lower-income demographics [76][78] - The company plans to leverage technology, including AI, to enhance core processes and lower costs [57] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the second half of the fiscal year, expecting positive sales growth driven by volume momentum and effective pricing strategies [7][15][68] - The company acknowledges ongoing inflation and value-seeking behavior among consumers but believes it can navigate these challenges effectively [76][70] Other Important Information - The company has achieved service levels of 98%, which is crucial for restoring consumer confidence and merchandising activities [14][67] - The company is about 85% covered for Q2 in terms of commodity pricing, with a focus on managing exposure to animal proteins [23] Q&A Session Summary Question: What is driving the expected inflection in sales growth for the second half? - Management attributes the expected growth to volume momentum in frozen products and successful pricing strategies [7][8] Question: How much did trade expense timing benefit organic sales growth in Q1? - The benefit from trade expense timing was approximately 50 basis points in Q1, which will flip to Q2 [12] Question: What is the outlook for frozen entrees given recent share loss? - Management remains positive about the frozen business outlook, citing strong innovation and recovery from supply interruptions [39][42] Question: How is the company addressing inflation and pricing elasticity? - The company tracks elasticities weekly and has built in historical expectations, indicating confidence in managing pricing without significant volume loss [71][100] Question: What are the expectations for promotional levels and volume share performance? - Promotional levels are returning to pre-COVID norms, and the company is cautiously optimistic about improving volume share performance [81][84]

Core Insights - The company, known for brands like Reddi-Wip and Slim Jim, reported quarterly earnings that exceeded analysts' expectations [1] Financial Performance - The quarterly earnings showcased a strong performance, indicating robust demand for the company's products [1] - Analysts had anticipated lower earnings, making the actual results a positive surprise [1]

Company Overview - Conagra Brands, Inc. (CAG) has a market cap of $8.7 billion and is a leading North American packaged foods company with a diverse portfolio including brands like Birds Eye, Healthy Choice, Slim Jim, Reddi-wip, and Marie Callender's [1] - The company operates across four segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice, focusing on innovative food products that cater to changing consumer preferences [1] Financial Performance - Conagra Brands is set to announce its Q1 2026 results on October 1, with analysts expecting an adjusted EPS of $0.33, a decrease of 37.7% from $0.53 in the same quarter last year [2] - For fiscal 2026, analysts forecast an adjusted EPS of $1.73, representing a 24.8% decrease from $2.30 in fiscal 2025, but anticipate an 8.7% year-over-year growth to $1.88 in fiscal 2027 [3] Stock Performance - Shares of Conagra Brands have declined over 44% in the past 52 weeks, underperforming the S&P 500 Index's 15.4% return and the Consumer Staples Select Sector SPDR Fund's 5.9% decline [4] - Following the release of weak Q4 2025 results, shares fell 4.4%, with adjusted EPS of $0.56 missing consensus estimates and net sales of $2.8 billion down 4.3% year-over-year [5] Analyst Sentiment - The consensus view on CAG stock is cautious, with a "Hold" rating from 17 analysts; two recommend "Strong Buy," 12 suggest "Hold," one advises "Moderate Sell," and two "Strong Sells" [6] - The average analyst price target for Conagra Brands is $20.47, indicating a potential upside of 13.2% from current levels [6]