Will Better Than Expected Earnings Help ConAgra (CAG) Today?

NEW YORK (TheStreet) -- ConAgra (CAG) posted a higher than expected fiscal third quarter earnings report Thursday, posting double-digit earnings growth while also reiterating its full year profit forecast of $2.22 to $2.25 a share. That forecast, however, is  lower than analysts' average forecast of $2.34 a share.

The commercial food maker of products such as Slim Jim, Swiss Miss  and Chef Boyardee had private brand sales of $1.1 billion, $600 million more than it had a year ago. That large jump, however, was due mainly to its acquisition of Ralcorp during that time.

Sales for the commercial foods segment were down slightly to $1.5 billion, while total revenue rose 14.5% to $4.4 billion.

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TheStreet Ratings team rates CONAGRA FOODS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONAGRA FOODS INC (CAG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $211.60 million to $248.70 million.
  • Net operating cash flow has significantly increased by 151.84% to $389.60 million when compared to the same quarter last year. In addition, CONAGRA FOODS INC has also vastly surpassed the industry average cash flow growth rate of 53.43%.
  • CONAGRA FOODS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CONAGRA FOODS INC increased its bottom line by earning $1.87 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.87).
  • You can view the full analysis from the report here: CAG Ratings Report
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