ConAgra (NYSE:CAG) is a tough business to figure. The majority of its sales come from retail packaged foods and products sold into the food service industry. The company also has a stable of well-known brands, including Healthy Choice, Butterball, Chef Boyardee, and others. While its business is similar to Kraft (NYSE:KFT), Smithfield Foods (NYSE:SFD), Hormel Foods (NYSE:HRL), and CampbellSoup (NYSE:CPB), ConAgra's recent performance bore little resemblance to that of its competitors. Judging by the company's latest numbers, investors shouldn't expect that to change anytime soon.

For the first quarter of fiscal 2006, ConAgra reported diluted earnings per share of $0.68 versus last year's $0.26. But those bottom-line figures obscure the true operational profitability of the company, which requires sorting out a number of one-time items and an unusually strong performance from the company's Food Ingredients business, the smallest of its units. After taking into account the company's $0.40-per-share gain on the sale of Pilgrim's Pride (NYSE:PPC), the earnings per share figure falls back to $0.28, or a 7.7% improvement versus last year.

But there are still more adjustments to be made, because of restructurings in both periods. The one-time charges in the retail products and food service businesses totaled $7 million for this year and $24 million for last year, meaning this year's numbers aren't as robust as they appear. Finally, there is the 27% gain in the food ingredients business, which turned in an operating profit of $76 million. $47 million of this operating profit comes from the sales and trading of energy, grains, fertilizer, and other commodities. It's a great performance, but the trading business cuts both ways, and investors shouldn't assume such large gains will continue.

I love well-priced companies that pay dividends, but only when they are well-funded by free cash flow. If you're looking at ConAgra for that 4.7% dividend yield, it's probably best to look for another opportunity. The last couple of years, the dividend has been funded by a variety of asset sales and one-time gains rather than free cash flow. In the company's conference call, management hinted that free cash flow was stronger this year than last; that's not just a positive, but also an improvement the company truly needed to make. However, if the company raises its dividend again this year, consider it a big warning sign to move on now or face disappointment later.

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Nathan Parmelee has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.