ConAgra Foods (NYSE:CAG) is a stock that struggled in the last fiscal year, but it's off to a much better start in the current fiscal year. That sets up the stock to be an interesting turnaround play, if management's initiative to reverse its sales decline last year takes hold. The company is intensifying its efforts to focus on better-performing products, end promotion of underperforming brands, and pursue opportunities in new retail channels. This fuels management's expectations for mid-single-digit percentage growth this year in adjusted earnings.

For investors looking for a combination value and income play, ConAgra stock could be the right pick. It's turnaround is starting to gain traction, the stock holds a modest valuation, and pays a solid dividend. For all these reasons, now might be the time to buy ConAgra stock.

Product reshuffling under way
ConAgra posted significant earnings declines in both its consumer foods and private brands categories last year. The company is off to a much better start in fiscal 2015, but there's a lot of work that still needs to be done. ConAgra's consumer foods segment posted a 1% sales decline last quarter, year over year, as its key Healthy Choice brand remained a poor performer. Overall volumes for the group were flat.

In response, ConAgra management is making the decision to end a few brands within the Healthy Choice line, and increase marketing of its higher-performing Cafe Steamers line. Based on this, management is counting on better performance from Healthy Choice over the course of the year. Within consumer foods, another struggling brand is the Chef Boyardee canned goods line. In response, the company is also rereleasing the "easy open" lids on its Chef Boyardee brand, which management admits was a mistake to pull from store shelves so early.

More broadly, ConAgra management stressed its progress in new channel distribution last quarter. ConAgra is seeing success in getting its products into new retail outlets, such as dollar stores, convenience stores, and club stores. The company is now not quite as reliant on traditional grocery stores for sales.

Another one of ConAgra's core operating segments is private brands, where it's still reeling from the effects of its ill-advised acquisition of Ralcorp Holdings last year. The nearly $5 billion takeover saddled the company with debt and ConAgra was counting on significant synergies to produce cost cuts that would have made the deal much more viable. Unfortunately, these synergies haven't materialized. Moreover, organic operating problems caused ConAgra to resort to severe pricing concessions that are also weighing on profits. Comparable profits declined 28% last quarter. Progress here will be slow, but management is confident that it has resolved those issues and once the period of pricing concessions is lapped, the results will look better.

ConAgra's turnaround fuels growth expectations
Because of the series of steps listed above, ConAgra has enough confidence to project modest growth in comparable sales this year. If the company manages to reach these expectations, the stock could prove to be a good buying opportunity right now because of its conservative valuation.

ConAgra is still being punished for its operating challenges in recent quarters. The stock trades for 14 times forward earnings estimates. This implies the relatively low expectations for ConAgra's turnaround. That being said, if the company can produce growth as its forecast suggests, investors may warm up to the stock.

Plus, ConAgra offers a measure of downside protection in the form of its dividend. ConAgra yields a nifty 3% at recent prices. Management has repeatedly reiterated its commitment to the $1 per share annualized payout in the company's earnings conference calls with analysts. That means that investors shouldn't be concerned about the sustainability of its dividend. And if the turnaround proves to be stronger than initially anticipated, it may leave open the possibility for a dividend bump later in fiscal 2015 or early fiscal 2016.

The bottom line is that while ConAgra's results are still weak, it's slowly turning itself around by accelerating promotion of higher-performing products, opening new avenues for growth in new retail outlets, and restructuring its private brands segment. That means that its modest valuation could prove to be a good buying opportunity, and its solid dividend could only add to returns.