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I'm Off the ConAgra Diet

NEW YORK ( TheStreet) -- The on-again/off-again love affair that the market has had with packaged food giant ConAgra (CAG - Get Report) appears to be off.

As is often the case, retail investors, who don't seem to fully grasp ConAgra's business, are left holding the "shopping" bag. The stock is down 17% over the past month. And with organic growth and margins still a concern, it's anyone's guess when the bleeding will stop.

On Tuesday, the company lowered its fiscal 2014 earnings per share expectations by 2.5% to a range of $2.34 to $2.38.

True, ConAgra isn't the only company struggling with growth. Companies such as Nestle (NSRGY), which has become the gold standard in this industry, haven't exactly outperformed.

And Kraft (KRFT) and Kellogg (K) have taken their lumps.

But this is not the first time that ConAgra has frustrated investors. Truth be told, as much as I've wanted to like this company, its poor history of execution has made that tough. It has lagged its peers in the most important categories, including stock performance, returns on capital and, most recently, margins.

What's more, contrary to what management has proclaimed, I don't believe that ConAgra is any closer today to resolving its profitability issues than it was, say, a year ago, prior to its deal for Ralcorp. ConAgra bulls will certainly disagree. And they will cite the possible 8% to 10% growth in EPS, even with the company's revised estimates.

But we can't discount the impact the lowered guidance will have on ConAgra's first-quarter results.

What's more, ConAgra's management has not found adequate ways to offset its underperformance, unlike Coca-Cola (KO) and PepsiCo (PEP), which have faced the challenge of poor unit volumes.

Here again, bulls will respond that the company will grow earnings by as much as 10% in the next quarter. But as I pointed out in the introduction, how much of that growth will be organic?

Consolidation happens quickly and frequently in this sector, so analysts are right to look at company performance using internal resources and exclude events like acquisitions.

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