TSC Ratings' Updates: ConAgra Foods

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Tuesday, June 2.

We've upgraded ConAgra Foods(CAG Quote) from hold to buy, driven by its revenue growth, good cash flow from operations, growth in earnings per share, relatively strong performance when compared with the S&P 500 during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Revenue increased by 6.1% since the year-ago quarter, and EPS improved by 26.5%. We feel the company is poised for EPS growth in the coming year. Net operating cash flow increased by 326.4% to $260.5 million compared with the same quarter last year. Return on equity decreased slightly from the same quarter a year ago.

Shares have tumbled by 19.6% over the past year, in part reflecting the market's overall decline. Although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

We've upgraded Kirby(KEX Quote) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.