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Is ConAgra (CAG) Stock Worth Adding to Your Portfolio?

Zacks Equity Research
Updated

On Jun 8, 2016, Zacks Investment Research upgraded ConAgra Foods, Inc. CAG to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold). Going by the Zacks model, companies with a Zacks Rank #2 are likely to perform better than the broader market over the next quarters.

Why the Upside?

ConAgra is funding lucrative capital deployment programs with the proceeds from the successful divestiture of its Private Brand segment. This is expected to enhance its shareholders’ utility in the long run. Moreover, the proceeds from the spin off will be used to lower the company’s debt burden, thereby assisting it in balance sheet deleveraging. We also expect the company’s margins to improve over time supported by better price/mix, operational efficacy, favorable input prices and increased volumes. The company’s deliberate acquisitions are also anticipated to boost top line in the to-be-reported quarters.  

However, analysts remain cautious on the stock, which is clearly evident from the downward revision in the Zacks Consensus Estimate over the past 90 days. As a result, estimates for the stock fell roughly 11.1% to $2.08 per share for 2016 and 0.4% to $2.41 for 2017. The downward estimate revisions are based on anticipation of headwinds like stiff competition leading to market share loss or anticipation of input supply or price-related problems.

CONAGRA FOODS Price and Consensus

CONAGRA FOODS Price and Consensus | CONAGRA FOODS Quote

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Other Stocks to Consider

Other well ranked stocks in the industry include B&G Foods Inc. BGS, Lancaster Colony Corporation LANC and Omega Protein Corporation OME. All the three stocks currently sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CONAGRA FOODS (CAG): Free Stock Analysis Report
 
B&G FOODS CL-A (BGS): Free Stock Analysis Report
 
OMEGA PROTEIN (OME): Free Stock Analysis Report
 
LANCASTER COLON (LANC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research