CAG Misses by a Penny - Analyst Blog
June 23 2011 - 5:27AM
Zacks
ConAgra Foods Inc. (CAG) posted an EPS of 47
cents in the fourth quarter of fiscal 2011, compared with 39 cents
in the year-ago quarter. The improvement is attributable to lower
incentive compensation expense and recent share repurchases. The
results missed the Zacks Consensus Estimate of 48 cents.
For FY11, EPS was reported at $1.75, up from $1.74 in the
previous year.
Revenues
Net revenues improved 5.3% from the year-earlier quarter to
$3,210 million, primarily driven by increased revenues from the
Commercial Foods segment. Reported revenue was also above the Zacks
Consensus Estimate of $3,198 million.
On a segmental basis, Commercial Foods segment increased 14.6%,
led by improved volumes for Lamb Weston specialty potato products,
and price increase due to higher input costs.
Revenues from Consumer Food segment rose 0.6% during the
quarter. The rise was partially offset by a 9% input cost inflation
and a lower demand situation.
For FY11, the company generated revenues of $12,303.1 million,
an increase of 2.4% from the previous year.
Margins
In the reported quarter, cost of goods sold (COGS) increased
8.4% from the year-earlier quarter to $2,505.1 million. SG&A
(selling, general and administrative) expense was $268.7 million, a
decline of 48.7% year over year.
General corporate expenses were $58.4 million, down from $123.8
million during the same period of the previous year. The decline
reflects the company’s continued lower incentive compensation
expenses as well as the cost reduction efforts during the
quarter.
Operating margin was recorded at 15.4% compared with 11.1%
during the year-earlier quarter. Operating margin in FY11 was
recorded at 13.4%, more or less in line with the earlier year.
Cash Flow
During the quarter, ConAgra spent $119 million as capital
expenditures for property, plant and equipment compared with $123
million in the year-earlier quarter.
The company paid a total dividend of $98 million compared with
$89 million in the year-ago quarter. ConAgra repurchased 6 million
shares for $138 million.
For FY11, net cash flow from operating activities dropped to
$1,352.3 million compared with $1,472.7 million in FY10.
Management stated that ConAgra’s results improved in the quarter
even though there were challenges of high input cost and other
unfavorable economic conditions.
Outlook
ConAgra expects overall fiscal 2012 to show a single digit EPS
growth, and remain committed to their long-term EPS growth goal of
6%-8% annually based on their pricing actions and productivity
programs.
ConAgra Foods Inc. is one of North America’s leading food makers
operating in Consumer Foods and Commercial Foods segments. The
company, over time, has given a tough competition to its peers,
such as HJ Heinz Co. (HNZ) and Kraft Foods
Inc. (KFT) based on its cost control measures on the
backdrop of rising raw material prices as well as its product-line
expansion programin a highly-competitive food industry.
We maintain a Neutral recommendation on the stock supported by
Zacks #3 Rank, which translates into a short-term Hold rating.
CONAGRA FOODS (CAG): Free Stock Analysis Report
HEINZ (HJ) CO (HNZ): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
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