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Steer Clear of ConAgra

Let me remind you that even with the 27% growth, the company still missed Street estimates. Plus, it's not just the Consumer business that is struggling. ConAgra's Commercial foods segment shed 0.4% in revenue, with a 7% decline in profits.

I won't deny that management is making some progress with synergizing Ralcorp. It just doesn't seem that management is able to produce any organic growth, which measures a company's operational performance and excluding events like acquisitions.

I'm not suggesting investors should completely dismiss ConAgra's absolute performance. But given how quickly this sector is known to consolidate, it's not enough to look at a single revenue number -- in this case, 27% growth -- and believe that it's digestible. With CEO Gary Rodkin making statements like, "We are revising our merchandising and promotion plans to improve our volume," it is clear that there is still a lot of work to be done.

In that regard, given that ConAgra has guided earnings for this current quarter to 8 cents below Street estimates of 63 cents per share, it's going to be a while before this company can revert to growing margins and generating the sort of cash needed to support a higher share price.

The tough part, however, is the stock looks cheap. Even so, investors should remain off the ConAgra diet until the company shows consecutive quarters of organic growth and improved margins.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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