Saturday, February 26, 2011

ConAgra Foods Stock Analysis

ConAgra Foods Inc (CAG) is a very large consumer and commercial food manufacturer for products such as Hunt's, Slim Jim, Orville Redenbacher popcorn and many others.  This is another company I wanted to analyze as food prices begin to rise, along with oil and precious metals.  Now lets begin the analysis.

P/E Ratio: Their current share price is $23.00 flat with a $1.54 EPS according to Google Finance.  This brings us to a (23/1.54) 14.94 P/E ratio, which is under my 15 on average that I like.  Compared to the S&P 500, ConAgra is undervalued, according to this metric.  On Morning star's website, the industry average is 17 for the market they specifically operate in, thus ConAgra is currently undervalued against it's current competition.  Thumbs on this metric.

Capital Appreciation: Solely based on the prior 52 weeks, ConAgra's high is $26.32, which breaks down to ((26.32-23)/23) 14.4% upside possibility.  Again, this would just be an additive to the main focus of my blog = their divided.

Dividend Yield & Payout Ratio: Their dividend per year, currently stands at (.23*4) $0.92 per share.  The yield, therefore, is (0.92/23) exactly at 4%.  4% is extremely solid, much higher than what I like and is very attractive.  Their payout ratio is 0.92/1.54 = 59.74%.  Boom, just barely under my 60% ceiling on the average that I like to see.  Also, their annualized dividend growth (according to my sources) is 9.23% and they have been paying a dividend since 1985; over 25 years of dividends!  The yield, ratio and growth rate receive another thumbs up in my book.

Conclusion: For the long-term investor, this seems like a stock priced to buy at the moment.  With rising food prices, money flowing into the market and a track record of dividends - proves it could be a staple in a portfolio.  Their dividend yield is exceptionally attractive, they have potential upside with a very acceptable level of payout on their earnings, I see this being a stock to fit well in any portfolio.  I can see the price of ConAgra to hit above $26 range in 3-4 months.  I suggest you do your own analysis and consult an advisor or other sources before making a decision.  Thank you!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

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