Food processor ConAgra (NYSE: CAG), whose products share space at the supermarket with Kraft (NYSE: KFT), Kellogg (NYSE: K), and Campbell Soup (NYSE: CPB), is down in Thursday's afternoon trading by over 6% as I write this. The company released earnings for the fourth quarter earlier this morning. Sales increased 8% according to the press release. Adjusted earnings from continuing operations came in at 41 cents per diluted share. This result benefited from an extra week.
The per-share profit compared very favorably to the 18 cents earned in last year's similar quarter. However, in terms of analyst expectations, the performance was relatively unimpressive. Earnings.com indicates that 41 cents is what the market was looking for.
The company says that it should earn somewhere between $1.63 per share and $1.66 per share in the next fiscal year. I currently see a stock price of $18.77 for ConAgra at AOL quotes. This gives the business a P/E of about 11.5 if the $1.63 prediction holds up. That isn't too expensive. ConAgra also sports a decent dividend yield.
The fact that the stock is trading down, however, does offer some concern, at least in the short term. I guess the market, from what I can gather in news reports, was mostly turned off by earnings merely being met and not exceeded. I can believe it. Wall Street simply works that way. Last time, ConAgra beat estimates and saw a bid for its shares.
Well, if you ask me, I think ConAgra is relatively cheap, and it should remain a good long-term holding. Investors who are indeed holding for a while can probably use this weakness to add to a position. Short-term traders might want to be careful.
Disclosure: I don't own any company mentioned; positions can change without notice.
Entrepreneur's Journal: Want to get a piece of the Buffett/Goldman honeypot?
The week in preview: No turkey earnings from Tyson, Hormel, Cracker Barrel ...
Comfort Zone Investing: Intel is saying something ... can you hear it?
Reader Comments (Page 1 of 1)
7-16-2009 @ 6:54PM
Steve said...
I love this. Due to explosion at Conagra plant, "Sudden shortage of Slim Jims causes panic."
http://pulse.alacra.com/analyst-comments/ConAgra_Foods_Inc-C1004092