Packaged-foods producer ConAgra (NYSE:CAG), perceived as a consumer-staples underdog, continues to post improving quarterly results. Fools, I've said it before, and I'll say it again: It's time to dig into the company's undervalued shares.

Producer of Healthy Choice, Peter Pan, and Swiss Miss brand products, the company saw a net sales decline of 2.4% for its 2010 second quarter. But don't let that performance sour your appetite.

Volume at the company's Consumer Foods segment rose 2%, on par with roughly comparable segment results recently posted by better-known peers General Mills (NYSE:GIS) and J.M. Smucker (NYSE:SJM), and well ahead of H.J. Heinz's (NYSE:HNZ) recent showing. Segment operating profit wasn't too shabby, either, leaping 31% to notch a fourth consecutive quarterly gain.

The company's underlying strength can also be found in the form of operating cash flow (OCF). Management pegs first-half OCF at approximately $650 million -- the "strongest first half performance in some time." Meanwhile, full-year OCF is expected to surpass $1.2 billion, a dramatic jump from recent years.

Finally, the bottom line gave shareholders plenty to chew on. Reported earnings per share were $0.55, a 45% year-over-year jump. Excluding hedging activities and other items, EPS came in at $0.52, representing a still-respectable 21% gain.

Lower raw-material costs helped boost profitability, but much of that benefit was passed along in the form of lower pricing. The real boon was about $90 million -- or approximately $0.20 per share -- in increased supply chain productivity. And this wasn't any one-off gain: Management has been on top of this issue for a while and sees full-year savings in the neighborhood of $300 million. Granted, some of that largesse will go to initiatives that include increased marketing (ad and promotional spending was up about 25% in the quarter), but profit should see its fair share of benefit, too.

What I suspect to be a popular knock against ConAgra is its large Commercial Foodservice segment. Sure, this business is facing headwinds as consumers continue to forgo dining out, but segment operating profit held fast in the quarter. Yet the market may be missing these favorable operating metrics, instead focusing on the segment's revenue figure, down 11% from the year-ago period. Grab a fork and dig a little deeper, though, and one sees that softer sales reflect the pass-through of lower commodity costs more than end-market weakness.

Ultimately, ConAgra claims a solid product portfolio, which includes a range of price points across both branded and private-label goods, along with a management team that is driving profitability. As for company shares, they trade at a 12.1 times forward earnings, beneath those of previously mentioned peers in addition to the stock of Kraft (NYSE:KFT), Unilever (NYSE:UL), and Kellogg (NYSE:K). Plus, ConAgra shares offer a competitive 3.5% dividend yield.

Fools, if you want in, I wouldn't wait much longer. Sooner or later, Mr. Market's gonna feast.

Other stocks for Foolish bargain hunters:

H.J. Heinz and Unilever are Motley Fool Income Investor recommendations. Unilever is a Global Gains selection. J.M. Smucker is a former Inside Value pick. Try any of our Foolish newsletters, free for 30 days.

Fool contributor Mike Pienciak doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.