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ConAgra Earnings: An Early Look

By Dan Caplinger - Apr 1, 2013 at 7:15PM

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Can the food company cash in on its recent Ralcorp acquisition?

The new earnings season is about to begin, but a few companies on off-quarter fiscal years are just now getting around to reporting their quarterly results. ConAgra (CAG 1.96%) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

The food industry has been a hotbed of investing activity lately, with investors looking to the usually boring sector as a way to play a rising consumer class around the world. ConAgra has made some interesting moves lately to compete better against its rivals. Let's take an early look at what's been happening with ConAgra over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on ConAgra



Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$3.87 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will ConAgra's earnings grow again this quarter?
Analysts have remained optimistic about ConAgra's earnings prospects in recent months, as they've increased their consensus view on the most recent quarter by a penny per share and boosted their full-year fiscal 2013 earnings-per-share call by $0.07. The stock has done exceedingly well, having risen 22% during the first three months of 2013.

The big news for ConAgra during the quarter was the completion of its takeover of Ralcorp Holdings. The move makes ConAgra the largest provider of private-label food products in North America, challenging top brand-name food makers Kraft Foods and General Mills and their higher-margin offerings. Kraft has chosen to hold the line on prices, which cost it market share, while General Mills continues to look for innovative new products in order to drive consumers to pay up for its premium brands. But with grocery-store chains looking to private-label brands to help them keep more profits for themselves, ConAgra stands to benefit greatly from the trend.

Merger and acquisition activity elsewhere in the sector was also a key driver of ConAgra's share-price move over the quarter, as the buyout offer from Warren Buffett and private equity firm 3G Capital to buy Heinz prompted investors to look at other players in the food space, including ConAgra. Given the small number of potential buyers with the purchasing power to consider a buyout of that magnitude, however, ConAgra doesn't look like a promising target at this time.

In its quarterly report, watch for ConAgra to start reporting exactly how the Ralcorp transaction has benefited the company. The merger represents a big opportunity for ConAgra, but it's one it can't afford to mishandle if it wants to keep growing.

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Conagra Brands, Inc. Stock Quote
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