Analysts’ recommendations for ConAgra
In this part, we’ll see what Wall Street analysts recommended for ConAgra Foods (CAG) before its fiscal 4Q16 earnings release. We’ll also look at analysts’ target prices for ConAgra over the next 12 months. There hasn’t been much change in analysts’ recommendations since we discussed ConAgra’s 3Q16 results. Around 60% of analysts still rate ConAgra as a “hold” and 40% rate it as a “buy.” No analysts rate it as a “sell.”
Analysts’ target prices for ConAgra
The average broker target price for ConAgra has risen slightly to $50.60 from $50.27. This 5% higher than ConAgra’s closing price of $47.91 on June 23.
Mentioned below are the return potential and target prices of ConAgra’s peers over the next 12 months.
- Campbell Soup (CPB) has a target price of $62 and return potential of -1.0%.
- McCormick & Company (MKC) has a target price of $98.38 and return potential of -3.9%.
- Kraft Heinz (KHC) has a target price of $90.19 and return potential of 4.4%.
ConAgra is part of the PowerShares Dynamic Food and Beverage (PBJ). PBJ invests 2.7% of its portfolio in ConAgra. It also invests 2.6% of its holdings in Campbell Soup. The Guggenheim Defensive Equity ETF (DEF) invests 1.2% in Campbell Soup.
Consumer Edge Research gave ConAgra the highest target price of $55. This target price is 15% higher than ConAgra’s closing price of $47.91 on June 23. Consumer Edge Research rated ConAgra as a “strong buy.” Jefferies increased its target price to $53 with a “strong buy” rating.
Bernstein is consistent with its earlier “hold” rating and target price of $49. JPMorgan Chase increased its target price to $52 on June 23. It’s consistent with its earlier “strong buy” rating. Barclays gave a target price of $51 with a “strong buy” rating.
A valuation multiple helps investors decide whether to enter or exit a stock. A company’s valuation multiple is impacted by various factors including its perceived growth, risk and uncertainties, and investors’ willingness to pay.
We’ll use the forward PE (price-to-earnings) multiple to compare ConAgra with its peers. A forward PE valuation multiple indicates how much an investor is willing to pay for a company’s earnings per share in the next four quarters.
ConAgra underperforms its peers
ConAgra is trading at a lower forward PE multiple than its peers. It has a forward PE multiple of 19.8x for the next 12 months as of June 23. It hasn’t changed much since its 3Q16 earnings. ConAgra’s lower growth expectations for revenue and earnings in fiscal 2016 justify the lower PE multiple.
Wall Street expects ConAgra’s earnings and revenue to fall by 5% and 26%, respectively, for fiscal 2016. General Mills is trading at 22.1x for the next 12 months as of June 23. Campbell Soup is trading at a PE multiple of 20.2x. Kraft Heinz has the highest multiple of 26.3x for the next 12 months.