CAG ConAgra Brands Inc

For Immediate Release

Chicago, IL – December 21, 2011 – Zacks Equity Research highlights CenturyLink, Inc. (CTL) as the Bull of the Day and Citi Trends, Inc. (Nasdaq: CTRN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ConAgra Foods Inc. (CAG), HJ Heinz Co. (HNZ) and Kraft Foods Inc. (KFT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

We are upgrading our recommendation on CenturyLink, Inc. (CTL) to Outperform on the back of synergies expected from the Embarq, Qwest and Savvis acquisitions. The company's bottom line met the Zacks Consensus Estimate but revenue more than doubled during the quarter.

Although the acquisitions would increase the company's operating cost and debt, they would provide excess synergies going forward and boost the company's competitive position. Furthermore, CenturyLink's sustained focus on investing in four areas broadband expansion, fiber cells, cloud computing and Prism TV to expand network capacity, and improving returns to its shareholders through healthy dividend payouts inspires our optimism.

The company believes the Qwest and Savvis acquisitions will significantly enhance CenturyLink's position as a global communications leader and strengthen its ability to drive long-term shareholder value. Hence, we have an Outperform rating with the price target of $42, based on 19.5x our earnings for 2011.

Bear of the Day:

Citi Trends, Inc. (Nasdaq: CTRN) falling comparable store sales, coupled with rising operating expenses battered the third-quarter 2011 results. The company incurred a quarterly loss of $0.38 per share that broadened from the prior-period loss of $0.03. The Zacks Consensus Estimate for the quarter was a loss of $0.37 per share.

Further, due to uncertainty hovering around sales given the global economic unrest, the company rolled back its earnings guidance range of $1.25 to $1.35 per share for fiscal 2011. The company decided not to provide any guidelines unless it finds any near-term catalysts to drive sales.

Intense competition from other retailers, seasonal nature of business and risks associated with sourcing merchandise from developing countries may further undermine the company's future growth prospects. Currently, we are maintaining a long-term Underperform recommendation on the stock.

Latest Posts on the Zacks Analyst Blog:

ConAgra Misses by a Penny

ConAgra Foods Inc. (CAG) reported second quarter of fiscal 2012 results, with diluted EPS (from continuing operations) of 41 cents compared with 45 cents in the year-ago quarter.

This decline of 8.9% reflects negative impact of the inflationary pressures in the company’s operating segments. The results missed the Zacks Consensus Estimate by a penny.

Revenues

Net sales improved 8.1% from the year-earlier quarter to $3,403.9 million from $3,147.5 million, primarily driven by a rise in sales volume, favorable price/mix and strategic pricing actions to mitigate rising input cost. Reported revenue was above the Zacks Consensus Estimate of $3,318 million.

On a segmental basis, Commercial Foods jumped 16.1% to $1,225.7 million, led by improvement in Lamb Weston operations, volume growth as well as pricing actions to cover increased input costs.

Revenues from the Consumer Food segment rose 4.2% to $2,178.2 million during the quarter. The rise reflects increase in segmental sales volume and price/mix.

Guidance

ConAgra reaffirms expectation of fiscal 2012 full-year diluted EPS to grow at a low- to mid-single-digit rate, based on revised inflation estimates, recent acquisitions and continued business challenges, over the comparable EPS of $1.75 during fiscal 2011. The company currently estimates that inflation for the Consumer Foods segment will be in the range of 10% for the full fiscal year.

ConAgra Foods has been significantly expanding its portfolio of businesses over a number of years, focusing on branded, value-added opportunities, through acquisition of a number of brands. Such acquisitions have been adding depth and dynamism to its existing product line of convenient meals, snacks and meal enhancers eventually. This strategy of expansion continues with the latest possession of Pretzel; which seems to have added another prestigious feather in ConAgra’s honored cap.

Also, of late, the company announced approval of a $750 million increase to the company’s share repurchase authorization, with no expiration date. Shares are expected to be repurchased periodically over several years, depending on market conditions and other factors, through open-market or privately negotiated transactions.

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 hold a Neutral recommendation on ConAgra over the long term. Currently, ConAgra has a Zacks #3 Rank, which implies a Hold rating in the short term (1-3 months).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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CONAGRA FOODS (CAG): Free Stock Analysis Report
 
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