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Steer Clear of ConAgra

NEW YORK ( TheStreet) -- When it rains, it pours. Unfortunately for ConAgra (CAG - Get Report) shareholders, there is no shelter for a stock that has been in a perpetual decline, losing close to 20% over the past month.

While it hasn't been a "nutritious" year for the overall packaged food industry, ConAgra hasn't been able to stop the bleeding -- unlike Kraft (KRFT) and Kellogg (K), which have also faced headwinds due to weak volumes.

For all of the criticism I've unleashed towards this company this year, ConAgra's managemen has produced nothing but dismal growth and eroding margins and has yet to prove me wrong. Now, after the company issued worse-than-expected guidance last week following another disastrous quarter, investors who insist on holding this stock might as well starve themselves.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Apple Gets Goldman Boost</em></a>]

On some levels, I take it personal for how poorly managed this company is now. It's sacrilege to condemn the maker of Swiss Miss and Peter Pan peanut butter. Just a year ago the company posted a net income of $250 million. But with year-over-year profits declining 42% to $144 million, one has to wonder if ConAgra's consumer segment, which is the company's largest division, will ever recover.

Essentially, earnings, on a per-share basis, declined from 61 cents to 34 cents. Although on an adjusted basis, earnings inched up to 37 cents per share, the company still missed Street estimates by 2 cents. This prolongs what has been a poor history of execution, which has made it tough to nibble on this stock, even when shares appeared to have bottomed.

Although a case can be made the stock has reached the discount bin, the company still lags its peers in areas like returns on capital and more importantly, margins. With revenue in the consumer segment shedding another 2% this quarter combined with a 21% decline in profits, I don't think anyone can justify having a glass-half-full view, regardless of the angle.

ConAgra bulls will disagree. As have been the case for the past couple of quarters, they will play the "Ralcorp card." It's true that ConAgra's overall revenue growth did climb 27% year over year. But astute investors understand that without the acquisition of Ralcorp, virtually all of that 27% growth never would have been realized.
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