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Conagra Brands Inc - Stock Quote CAG

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Morningstar's Conagra Brands Inc Stock Analysis

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Economic Moat

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Capital Allocation

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Despite a Challenging Environment, Conagra Shares Look Compelling as Management Is Executing Well

Analyst Note

| Rebecca Scheuneman, CFA |

Our high-level takeaway from no-moat Conagra’s fiscal 2022 third quarter is that despite a difficult environment, the firm is managing the variables under its control well. Specifically, Conagra has improved its innovation process to develop on-trend products more effectively, resulting in an 80-basis-point increase in its market share in the last two years. That said, factors outside of its control continue to cause headwinds. Inflation has continued to accelerate, resulting in the need for another round of price increases (on top of the 10% already employed), to be put in place in the first fiscal quarter. While elasticities were rather resilient through the third quarter (ended Feb. 27), as gasoline prices rose in March, consumers began migrating to private brands across grocery, which is likely to pressure Conagra’s volumes going forward. Although Conagra has sold several businesses with high private brand exposure, we estimate that 40% of its U.S. retail sales still stem from categories in which private label has a significant presence (down from 50%).

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Conagra Brands Inc's Company Profile

Business Description

Conagra Brands is a packaged food company that operates predominantly in the United States (over 90% of revenue and profits). It has a significant presence in the freezer aisle, with brands such as Marie Callender’s, Healthy Choice, Banquet, and Birds Eye. Other popular brands include Duncan Hines, Hunt’s, Slim Jim, Vlasic, Orville Redenbacher's, Reddi-Wip, Wish-Bone and Chef Boyardee. While the majority of revenue is sold into the U.S. retail channel, 7% of fiscal 2021 sales were to the food-service channel, down from 11% in fiscal 2019 due to the pandemic.

Contact
222 W. Merchandise Mart Plaza, Suite 1300
Chicago, IL, 60654
T +1 312 549-5000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Feb 28, 2022
Fiscal Year End May 31, 2022
Stock Type Classic Growth
Employees 18,600

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