What Should You know About ConAgra Brands (CAG) Before Investing?

Now trading at a price of $37.58, ConAgra Brands has moved 0.4% so far today. In contrast, the S&P 500 index moved -1.0%. Read below for a basic value analysis of ConAgra Brands.

ConAgra Brands shares moved 9.0% over the last 52 weeks, with a high of $41.3 and a low of $31.02. During this time, the stock outperformed the S&P 500 index by 17.0%. As of January 2022, the company's 50-day average price is $36.0. Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company in North America. The large-cap Consumer Staples company has 18,000 full time employees and is based in Chicago, IL. ConAgra Brands has returned a 3.4% dividend yield over the last 12 months.

Snapshot of the Company's Consistent Operating Margins:

2019-05-31 2020-05-31 2021-05-31 2022-05-31
Revenue (MM) $9,538 $11,054 $11,185 $11,536
Revenue Growth n/a 15.89% 1.18% 3.14%
Gross Margins 27.8% 27.8% 28.4% 24.6%
Gross Margins Growth n/a 0.0% 2.16% -13.38%
Operating Margins 12.4% 13.1% 15.9% 11.7%
Operating Margins Growth n/a 5.65% 21.37% -26.42%
Net Margins 7.11% 7.6% 11.61% 7.7%
Net Margins Growth n/a 6.89% 52.76% -33.68%
Earnings Per Share $1.52 $1.72 $2.66 $1.41
EPS Growth n/a 13.16% 54.65% -46.99%
Diluted Shares (MM) 446 489 488 477
Free Cash Flow (MM) $772 $1,473 $962 $713
FCF Growth n/a 90.72% -34.72% -25.87%
Capital Expenditures (MM) -$353 -$370 -$506 -$464
Net Debt / EBITDA 6.7 4.97 4.02 4.97

ConAgra Brands Is Overpriced:

Compared to the Consumer Staples sector's average of 24.36, ConAgra Brands has a trailing twelve month P/E ratio of 26.7 and, according to its EPS guidance of 2.81, an expected P/E ratio of 13.4. ConAgra Brands's PEG ratio is 0.89 based on its 13% compound average growth rate of historical and projected earnings per share. This suggests that company's shares are undervalued.

Furthermore, ConAgra Brands is likely undervalued in terms of its equity because its P/B ratio is 2.1 compared to its sector average of 4.29. The company's shares are currently trading 37.3% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 1.83 * 18.183) = $27.36

ConAgra Brands Is the Subject of Mixed Market Indicators:

14 analysts are following ConAgra Brands and have set target prices ranging from $35.0 to $48.0 per share. On average, they have given the company a rating of hold. At the current price of $37.58, CAG is trading -8.65% away from its average analyst target price of $41.14 per share, implying an analyst consensus of some upside potential for the stock.

The company has an average amount of shares sold short since 4.1% of the company's shares are tied to short positions. Institutions own 84.7% of ConAgra Brands's shares, while the insider ownership rate stands at 0.46%. The biggest shareholder is the Vanguard Group, Inc. with a 12% stake in the company worth approximately $2,140,554,461.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.