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On Friday, Standard & Poor's lowered its corporate credit rating for ConAgra Foods (NYSE: CAG). The ratings firm lowered CAG's rating to "BBB" from "BBB+" and removed all ratings on the company from CreditWatch with negative implications, attributing the move to weak credit and high operating costs.
S&P noted that higher operating costs have hurt margins, particularly in CAG's consumer foods segment. This part of CAG's business brought in 64% of the firm's fiscal 2008 revenue.
S&P believes that CAG will "modestly improve" credit measures from current levels during the next two years. S&P could revise CAG's outlook to negative if the firm becomes more aggressive in its financial policy. Currently, CAG's outlook is stable.
Technically, CAG faces resistance at the $18 level, which has acted as quite the roadblock for the food firm during the past six months. This region has capped any rally attempts from the stock since late 2008.
In addition, CAG's 10-month moving average is dropping into the $18 region to act as resistance. CAG has not finished a month atop this moving average in more than a year. Watch for this trendline to provide staunch resistance for the struggling stock.
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