uploads///CAG Valuation

Conagra’s Valuation after Its 3Q17 Earnings

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Nov. 20 2020, Updated 1:24 p.m. ET

Valuation summary

As of March 24, 2017, Conagra Brands (CAG) was trading at a 12-month forward PE (price-to-earnings) ratio of 21.9x. That means that Conagra is trading at a premium to the forward PE ratios of the Consumer Staples Select Sector SPDR ETF (XLP) at 21.3x and the S&P 500 (SPX) at 18.6x.

Conagra’s valuation multiple is also higher than the peer group average of 20.6x. As of March 24, 2017, General Mills (GIS), JM Smucker (SJM), and TreeHouse Foods (THS) were trading at forward PE multiples of 18.4x, 16.8x, and 21.8x, respectively. Forward PE multiples for Pinnacle Foods (PF) and McCormick (MKC) were 22.1x and 24.0x, respectively, which were higher than Conagra’s.

We should point out that the 12-month forward PE tends to differ among companies based on the following factors: growth expectations, leverage, profitability, business model, and risk-return profiles.

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Growth expectations

Analysts now expect Conagra to generate revenues of $7.8 billion in fiscal 2017, which reflects a fall of 33.2% year-over-year. Most of the expected fall is due to the company’s planned exit from underperforming brands. However, management remains upbeat on the strategic measures it has taken to revive sales. It expects improvement in its top line in the coming quarters.

Analysts expect Conagra’s fiscal 2017 adjusted EPS (earnings per share) to be $1.71. The company expects its adjusted EPS to be at or slightly above its earlier guidance of $1.65–$1.70.

For more updates, be sure to visit our Consumer Staples page.

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