Analyst Note| Rebecca Scheuneman, CFA |
We think no-moat Conagra is managing well in the current environment, which is fraught with labor shortages, supply chain disruption, and inflation. Although these challenges have prevented Conagra from filling some orders, it still managed to post 7% two-year organic growth (flat year over year) in its August-ended fiscal first quarter. We’re encouraged that Conagra continues to perform well relative to its peers, with IRI data showing yet another quarter of market share gains (80 basis points), as well as household penetration gains and repeat purchase rates that exceed the average of its top 15 peers. These data give us confidence in our long-term thesis on Conagra, that its turnaround efforts under CEO Sean Connolly are bearing fruit and should lead to 2% organic sales growth and 19% operating margins in the next few years.