ConAgra Misses Estimates in 3Q13 - Analyst Blog
April 03 2013 - 8:03AM
Zacks
ConAgra Foods Inc. (CAG), a North American
branded and value-added food company, posted disappointing results
for fiscal third quarter 2013. ConAgra’s diluted earnings per share
from continuing operations, adjusted for items impacting
comparability were recorded at 55 cents versus 51 cents reported in
the year-ago quarter, increasing by 7.8%. However, earnings missed
the Zacks Consensus Estimate of 57 cents by 3.5%.
Revenues: Net sales improved 13.4% to $3,850.5
million from $3,396.0 million in the year-earlier quarter, driven
by increased volumes and contribution from acquired businesses.
Reported revenue marginally missed the Zacks Consensus Estimate of
$3,869.0 million.
On a segmental basis, revenue from Commercial
Foods increased 1.3% year over year to $1,255.5 million,
led by the benefit of a favorable price-mix, increased productivity
along with a contribution from the Lamb Weston potato
operations.
Revenue from the Consumer Foods segment rose
6.8% to $2,303.2 million during the quarter. The rise reflects
contribution from favorable acquisitions and price/mix, slightly
offset by an organic revenue volume decline.
ConAgra established new segments to represent the revenues from
Ralcorp Holdings acquired in January. Ralcorp Frozen Bakery
Products and Ralcorp Food Group recorded revenues of $79.3 and
$212.5 million, respectively.
Margins/Costs: In the reported quarter,
ConAgra’s COGS (cost of goods sold) shot up 14.1% from the
year-earlier quarter to $2,976.5 million. SG&A (selling,
general and administrative) expense was $614.0 million, up 72.1%
year over year, due to the integration of Ralcorp. Operating margin
was recorded at 11.8% as against 14.2% during the year-earlier
quarter, resulting from an increase in operating expenses.
Balance Sheet: Cash and cash equivalents at end
of fiscal third quarter 2013 were $723.8 million, an increase from
$247.0 million in the previous quarter. Senior long-term debt
increased to $9,649.4 from $3,413.4 million at the end of second
quarter of fiscal 2013. The increase was a result of debt incurred
to fund the Ralcorp acquisition.
ConAgra also announced a dividend payment of 25 cents per share
to the shareholders as of Apr 30, to be paid on May 31.
During the quarter, ConAgra acquired Ralcorp Holdings for $90.0
per share in cash.
Guidance: For fiscal 2013, ConAgra reaffirmed
its earnings per share (adjusted for items impacting comparability)
guidance at $2.15. It is also expected that Ralcorp will contribute
to the earnings in fiscal 2013 and 2014 to the tune of 5 cents and
25 cents per share, respectively.
ConAgra currently carries a Zacks Rank #2 (Buy). Other stocks
worth a look in the food industry are Flowers Foods
Inc. (FLO), which carries a Zacks Rank #1 (Strong Buy);
along with Campbell Soup Company (CPB) and
BRF - Brasil Foods S.A. (BRFS) both of which carry
a Zacks Rank #2 (Buy).
BRF-BRASIL FOOD (BRFS): Free Stock Analysis Report
CONAGRA FOODS (CAG): Free Stock Analysis Report
CAMPBELL SOUP (CPB): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
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