ConAgra Foods Stock Analysis

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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.

Image Documentation: http://www.wisynco.com/conagra

Lance Dividend Analysis

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Lance, Inc. (LNCE) is in the consumer industry, food staple manufacturer.  They make food snacks like the peanutbutter and honey crackers that I am eating right now, in fact.  They are working with over a $1B in market capitalization and go up against the big guns such as J&J Snack foods, Kraft, Kellogg and that sort.  Smuckers may also be a huge competitor.  During difficult times, this company would be a very good company to own, in my opinion due to the demand for cheaper snack foods and a solid dividend.  Let us begin the simple analysis.

P/E Ratio: Lance's earnings per share is $1.01 according to Google Finance.  To describe how this is derived, you take the Net Income and divide it by the number of shares outstanding.  The current share price of Lance, as of February 20, 2011, is $18.31.  Therefore, the P/E is - 18.31/1.01 = 18.13.  This is higher than what I like, typically under 15.  This shows that they are not undervalued when compared to the overall market as a whole.  If the share price came down and/or the earnings increased, the P/E would decrease, making this a more attractive stock.  Also, Morning star shows the Industry Average to be 17.4 P/E, therefore Lance is a tad higher than that as well; appearing that there may be more attractive companies/stocks within that industry.

Dividend Yield: Lance's Dividend per quarter stands at 16 cents per quarter or 64 cents for the year.  Thus, 0.64/18.31 = roughly 3.5%.  This is pretty good and much higher than the S&P 500 on average. What's good with stocks, is that they usually increase with inflation, therefore they tend to be more attractive than bonds given their fairly comparable yields.  Lance also paid a special cash distribution in December of 2010 for $3.75!

Dividend Payout Ratio and Growth Rates:  Since their dividend per year is 64 cents and their earnings per share is 1.01, this gives us .64/1.01 = 63.36% payout ratio.  This is just a smidge higher than my usual range of 40-60%, but doesn't alarm me too much as it is just a small amount.  According to my analysis and sources, their dividend growth rate is in negative terms of (1.3%); they used to pay a higher dividend in the pre-2000's but cut it down to 16 cents a share from 24.  This obviously doesn't attract investors.  They have paid dividends for roughly 21 years, which is a good sign.

Conclusion: Lance is a strong company, but there are red flags based on the analysis TODAY.  They have a higher P/E than their industry average and S&P 500 average, and they haven't increased their dividend in over 10 years.  They do, however, provide a solid 3.5% yield currently; higher than most companies.  As of now, I will not add or recommend a position.  If Lance drops in price, and/or increases dividend, and has a solid 2011 year - I will further evaluate.

-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.