Rating Change #7
ConAgra Foods Inc
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- CONAGRA FOODS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CONAGRA FOODS INC reported lower earnings of $1.11 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($1.98 versus $1.11).
- Net operating cash flow has decreased to $272.60 million or 33.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 133.8% when compared to the same quarter one year ago, falling from $254.90 million to -$86.20 million.
ConAgra Foods, Inc. operates as a food company primarily in North America. The company operates through two segments, Consumer Foods and Commercial Foods. The company has a P/E ratio of 22.2, above the average food & beverage industry P/E ratio of 22 and above the S&P 500 P/E ratio of 17.7. ConAgra has a market cap of $10.06 billion and is part of the
food & beverage
industry. Shares are down 5.9% year to date as of the close of trading on Tuesday.
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