Long-established in the Consumer Packaged Goods industry, Conagra Brands Inc (CAG, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.6%, juxtaposed with a three-month change of 10.25%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Conagra Brands Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 7/10
- Momentum rank: 1/10
Based on the above method, GuruFocus assigned Conagra Brands Inc a GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding Conagra Brands Inc's Business
Conagra Brands Inc, with a market cap of $14.95 billion and sales of $12.17 billion, is a dominant player in the U.S. packaged food sector. The company boasts a healthy operating margin of 12.29% and is known for its array of popular frozen food brands such as Marie Callender's, Healthy Choice, Banquet, and Birds Eye. Beyond frozen foods, Conagra Brands Inc also offers snacks, shelf-stable staples, and refrigerated foods through well-known brands like Duncan Hines, Hunt's, Slim Jim, and Orville Redenbacher's. The company's primary market is the U.S. retail channel, with a minor 8% of fiscal 2023 revenue coming from international markets and 9% from foodservice.
Financial Strength Breakdown
Conagra Brands Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 3.43 positions it worse than 70.73% of 1377 companies in the Consumer Packaged Goods industry, signaling potential challenges in managing interest expenses. The Altman Z-Score of 1.87, although not indicative of immediate financial distress, suggests vulnerability. Furthermore, the low cash-to-debt ratio at 0.01 and a debt-to-Ebitda ratio of 4.82, which is above the cautionary level of 4, highlight the company's debt management concerns.
Growth Prospects
The company's growth trajectory appears limited, as reflected by its low Growth rank. Additionally, Conagra Brands Inc's predictability rank of one star out of five exacerbates investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering Conagra Brands Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and may want to explore other opportunities with stronger financial health and growth prospects. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
