Earnings Preview: CAG - Analyst Blog
December 15 2011 - 4:30AM
Zacks
ConAgra Foods Inc.
(CAG) will be reporting its second-quarter 2012 financial results
on Tuesday, December 20, 2011.
The current Zacks Consensus
Estimate for earnings per share (EPS) is 43 cents, representing an
annualized decline of 5.00%.
With respect to earnings surprises
over the trailing four quarters, CAG outperformed the Zacks
Consensus Estimate in one quarter, underperformed in two and was in
line in the remaining quarter. Average earnings surprise was 0.06%,
indicating that the company outperformed the Zacks Consensus
Estimate by the same magnitude over the last four quarters.
First-Quarter 2012
Highlights
On September 20, 2011, ConAgra
Foods Inc. reported its first quarter fiscal 2012 results, with
diluted EPS (from continuing operations) of 20 cents compared with
32 cents in the year-ago quarter.
This decline of 38% reflects
negative impact of short-term changes in the wheat market affecting
the company’s Commercial Foods segment and the inflationary
pressures in the Consumer Foods segment. The results missed the
Zacks Consensus Estimate of 31 cents per share.
Net sales improved 9.5% from the
year-earlier quarter to $3,072 million, primarily driven by a rise
in sales volume and favorable price/mix. Reported revenue was above
the Zacks Consensus Estimate of $2,942 million.
In the reported quarter, cost of
goods sold (COGS) increased 14.9% from the year-earlier quarter to
$2,473.3 million. SG&A (selling, general and administrative)
expense was $422.9 million, up 3.1% year over year.
Agreement of Estimate
Revisions
In the last 30 days, no analyst
increased or decreased the company’s EPS estimates for the current
quarter, whereas one increased the same for the next quarter. One
analyst increased the EPS estimate for fiscal 2012, while two
followed the similar trend for fiscal 2013.
Magnitude of Estimate
Revisions
Estimates over the last 30 days
remained static at 43 cents per share for the second quarter of
2012, representing a year-over-year decline of 5.00%.
Estimate for fiscal 2012 remained
static at $1.79 over the last 30 days while that for fiscal 2013,
the trend was followed at $1.95. These estimates represented a
year-over-year growth of 2.46% and 9.00% for 2012 and 2013,
respectively.
Our Take
ConAgra Foods has been
significantly expanding and improving its business, focusing on
branded and value-added products. This, along with the strategic
marketing investment, has been adding dynamism to its existing
product lines and we believe this will continue to raise profit and
induce satisfactory results in the coming quarter. However,
shifting of consumer preference toward cheaper private labels
remains a concern for shrinking market share under an intensely
competitive environment.
Omaha, Nebraska based ConAgra Foods
Inc. is one of North America’s leading food companies, serving
grocery retailers, restaurants and other foodservice
establishments, with brands in 97% of America’s households. The
company, over time, has given tough competition to its peers, such
as HJ Heinz Co. (HNZ) and Kraft Foods
Inc. (KFT).
We currently maintain a long-term
Neutral recommendation on the stock. ConAgra has a Zacks #3 Rank,
which translates into a short-term Hold rating (1-3 months).
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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