Thursday, June 25, 2009

Conagra (CAG) dissapoints, down 4.5%

AlphaNinja - Conagra (CAG) reported earlier today. Missed earnings by 1cent.

The stock traded down 4% today, but the company performed extremely well. The commercial Foods segment, despite sales actually declining, increased segment margins demonstrably.

Companywide earnings also improved markedly, after shedding some lesser-performing assets

Consumer Foods Division profit contributions raced ahead of actual sales growth, impressive:

The stock traded down today not because the quarter was all that bad, but b/c the stock is richly valued. Sure, the PE is about 11 based on upcoming earnings. But Free Cash Flow will be less than net income, as the company spends more on capital expenditures than it adds back in depreciation. Free Cash Flow looks to yield 6% of Market Value - sorry but that's too expensive.

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