Another day, another food company became sour.
As General Mills on Wednesday,
posted disappointing sales figures on Thursday, sending its shares sharply lower.
Now, the fourth largest parcel shipping company in the United States is revenue, and Conagra recently struggled with falling sales at Pinnacle Foods, which it only bought last year. But the fourth quarter ended in May also saw weakness in their core businesses. Organic sales, which exclude recent acquisitions, fell 0.7% from the previous year. Analysts had expected growth of 1
Conagra accused some of the weakness of some of his aging brands such as Hunt's, who recalled tomato paste boxes in the quarter, and Chef Boyardee. It's not a shock.
But Conagra also called Marie Callender as a contributor to the sales pitch, which should be more concerned.
Marie Callenders is one of the company's recently updated frozen brands, which until recently had led the growth.
The company cited intensified competition for Marie Callenders, says rivals used aggressive short-term campaigns. The trend may indicate that competitors are taking a page from the Conagra's playbook and are investing more in the growing frozen food category.
Nevertheless, there are reasons to remain optimistic about Conagra. Its results and those of
are reminders that constant innovation has become necessary just to maintain sales in today's food market. Among the major US food companies, Conagra has the best results in this regard, and it continues to innovate and refurbish its brands with ambitious new product deployment plans.
As JPMorgan analyst Ken Goldman pointed out, the company devoted nine slides to a 53-light presentation on Thursday to its plant-based meat brand Gardein, trying to capture some of investor enthusiasm for rival
Investors should also be encouraged by Conagra's valuation, which at 12.4 times ahead earnings, according to the FactSet consensus, is the second cheapest of six major food groups, only pricis than embattled
In this challenged sector, Conagra is still the best bet.
Write to Aaron Back at firstname.lastname@example.org