Chicago, Illinois-based Conagra Brands, Inc. (CAG) is a consumer packaged foods company that boasts a broad portfolio of over 70 iconic brands, including Birds Eye, Duncan Hines, Slim Jim, Healthy Choice, and Reddi-Wip. Valued at a market cap of $10.3 billion, the company operates across grocery, snacks, frozen, refrigerated, international, and food service segments, serving both retail and food service customers.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and CAG fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the packaged foods industry. The company's expertise in brand modernization and product innovation allows it to continuously refresh legacy brands while introducing new offerings that align with emerging consumer trends such as health-conscious eating, high-protein snacks, and GLP-1-friendly products. Its balanced mix of value and premium products provides resilience against economic fluctuations, while its broad distribution network enables it to supply products to major retail chains, food service providers, and international markets.
This consumer packaged foods company has slipped 35% from its 52-week high of $33.24, reached on Sep. 10, 2024. Shares of CAG have declined 15.9% over the past three months, lagging behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 2.6% return during the same time frame.
In the longer term, CAG has fallen 25% over the past 52 weeks, considerably underperforming XLP’s 4.8% rise over the same time frame. Moreover, on a YTD basis, shares of CAG are down 22.1%, compared to XLP’s 3.6% gain.
To confirm its bearish trend, CAG has been trading below its 200-day and 50-day moving averages since early October, 2024, with slight fluctuations.
On Apr. 3, shares of Conagra Brands closed up 1.5% after its Q3 earnings release despite delivering a weaker-than-expected performance. Both the company’s revenue of $2.8 billion and adjusted EPS of $0.51 fell short of the consensus estimates. Moreover, its top line declined 6.3% from the year-ago quarter due to weaker performance across all segments, while its bottom line fell 26.1% from the same period last year, driven by lower sales and a decline in adjusted gross profit.
However, management highlighted that the issue was primarily due to supply constraints limiting shipments to retailers rather than a slowdown in consumer demand. This likely explains why the stock rallied despite the company missing earnings estimates.
CAG has also underperformed its rival, Hormel Foods Corporation’s (HRL) marginal uptick over the past 52 weeks and 1.7% dip on a YTD basis.
Looking at CAG’s recent underperformance, analysts remain cautious about its prospects. The stock has a consensus rating of "Hold” from the 17 analysts covering it, and the mean price target of $24.50 suggests a 13.4% premium to its current price levels.
