OK, ConAgra's (NYSE: CAG) turnaround may not be that far along, but the market has definitely come to recognize the value in this packaged-foods producer. We'll talk more about that later. First, let's sample the company's fiscal 2010 third- quarter results.

Net sales slipped roughly 1%, to $3.1 billion. Top-line performance was sapped by the company's commercial foods segment, where sales once again declined even as profit rose. Results here parallel what we recently saw from foodservice distributor SYSCO (NYSE: SYY).

At ConAgra's larger consumer foods division, however, sales picked up 2% compared with the year-ago period. Brands such as Marie Callender's, Slim Jim, and Chef Boyardee contributed to the gain.

Earnings per share looked much better. Driven by lower input costs and productivity savings, EPS rose 16% as reported, and a still-respectable 10% on a comparable basis. Operating cash flow also warrants mention. Fiscal year to date, it has soared to $1.1 billion, compared with less than half that amount for the year-ago period.

I first suggested that ConAgra was unduly unloved by investors back in July 2009, pointing out that companies such as Kraft (NYSE: KFT) enjoyed a 25% higher valuation. At the time, ConAgra shares were trading at roughly $19. Before yesterday's sell-off, they had breached $26, a gain of about 36%.

Now, about the market's reaction to the quarter; shares are down roughly 5%. Volume in ConAgra's consumer segment advanced 3%, outpacing a sales increase of 2% -- about half of which was due to favorable foreign exchange. In other words, net pricing came down during the quarter. And that seems to have investors wondering if the company is moving more products primarily by virtue of discounting.

It is indeed a relevant question, as was one analyst's implied reference to Wal-Mart's (NYSE: WMT) latest cost-cutting plan, but I don't see reason to worry just yet. Management made it clear that the use of coupons was related exclusively to new-product launches -- a normal practice in any economic environment -- and that lower prices on certain oils and spreads simply reflected the "pass through" of lower commodity costs. We've seen the latter move embraced by competitors such as Kraft and Unilever (NYSE: UL).

To be sure, the value I once saw in ConAgra shares has largely been realized. The stock does, however, continue to trade at a modest forward P/E discount to H.J. Heinz (NYSE: HNZ) and J.M. Smucker (NYSE: SJM), among others, but its outsized exposure to the foodservice and restaurant industry may justify the gap. Even though that segment has recently been growing profits against sales declines, such performance can't go on forever.

In summary, while I don't believe it's reckless to nibble at shares at today's prices, cautious investors may want to wait another quarter or two before really jumping in. In my view, the stock, for now, is a hold.

SYSCO and Wal-Mart are Motley Fool Inside Value choices. Unilever is a Global Gains selection. H.J. Heinz, SYSCO, and Unilever are Income Investor selections. The Fool owns shares of SYSCO. Try any of our Foolish newsletters free for 30 days.

Fool contributor Mike Pienciak holds no financial interest in any company mentioned in this article. The Fool has a disclosure policy.