Conagra: Keeping My Expectations Low Ahead Of Earnings (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Conagra Brands, Inc.'s Grocery & Snacks and Refrigerated & Frozen segments are the main drivers of revenue and adjusted EBIT performance. My analysis focuses mainly on the revenue dynamics of these units.
• Revenues are pressured by volume and pricing pressures, present across all major segments. Volume growth in Frozen is driven by pricing reductions, which contradicts management's pricing outlook for FY25.
• Conagra's execution is patchy; the company has missed on revenue results and also lowered guidance expectations. Management has warned that Q1 FY25 is seasonally weak. I'm looking for optimism in Q2.
• 1-yr fwd P/Es are discounted vs. history and are also trading at a larger than usual discount vs. comps, making a case for multiple reversions and upside.
• Relative to the S&P500, CAG is in a broader monthly and quarterly downtrend. There may be some incremental upside, but I anticipate eventual underperformance to continue.

Read the full article here.