We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Conagra Brands, Inc. (CAG - Free Report) announced that it has completed the sale of Wesson oil brand to Richardson International. The move is aligned with the company’s commitment toward portfolio refinement. The divestiture involves the sale of all assets associated with Wesson brand along with the Memphis facility. Management has not disclosed the financial details of this deal. Let’s take a closer look at how such moves are likely to benefit the company.
Focus on Portfolio Refinement
Conagra focuses on boosting competency by reshaping the portfolio through significant inorganic moves. In sync with this, the company tries to acquire high-margin generating businesses and divest the less profitable ones. Apart from the divestiture, the company recently disclosed that it is exploring strategic alternatives to sell the Italian frozen pasta business — Gelit. Prior to this, the company exited private label brands and non-key businesses including Spicetec as well as JM Swank and executed Lamb Weston’s spin-off in 2016. Moreover, the company concluded the sale of the Canadian Del Monte processed fruit and vegetable business to Bonduelle Group during the first quarter of fiscal 2019.
Meanwhile, Conagra is carrying out buyouts to enhance business strength. On this front, the company completed the acquisition of Pinnacle Foods in October 2018. The consolidation of these food companies is likely to create a robust portfolio of leading, iconic and on-trend brands as well as exploit long-term benefits in the frozen foods space. Markedly, including the impacts from Pinnacle Foods’ acquisition, Conagra anticipates net sales to grow 22-23% in fiscal 2019. Previously, the company acquired Angie's Artisan Treats, LLC, which is strengthening the snacking business. Also, the buyout of Sandwich Bros is boosting the frozen business. In fact, contributions from the buyouts of Angie's BOOMCHICKAPOP and the Sandwich Bros. drove the company’s second-quarter fiscal 2019 sales growth by about 200 basis points.
Escalated input costs are a persistent threat to Conagra. During the second quarter, it witnessed input cost inflation of nearly 2.9%. Notably, the company saw a rise in transportation and warehousing expenses. Higher costs of packaging and certain ingredients also weighed on gross margin in the said period. Well, the company anticipates input cost inflation to be 3.0-3.2% in fiscal 2019, which is a threat to margins. Apart from this, sales in the Foodservice segment are witnessing year-over-year declines for four straight quarters due to soft volumes. Thanks to such headwinds, the company’s shares have plunged nearly 27% in the past three months. Well, rising input costs have also been plaguing the performance of other players from the Food-Miscellaneous space such as Campbell Soup (CPB - Free Report) , Lamb Weston (LW - Free Report) and General Mills (GIS - Free Report) .
Nevertheless, we believe that this Zacks Rank #3 (Hold) company’s portfolio refinement efforts combined with the unique value-over-volume strategy will help tide over the aforementioned hurdles.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
Image: Bigstock
Conagra (CAG) Divests Wesson Oil Brand, Refines Portfolio
Conagra Brands, Inc. (CAG - Free Report) announced that it has completed the sale of Wesson oil brand to Richardson International. The move is aligned with the company’s commitment toward portfolio refinement. The divestiture involves the sale of all assets associated with Wesson brand along with the Memphis facility. Management has not disclosed the financial details of this deal. Let’s take a closer look at how such moves are likely to benefit the company.
Focus on Portfolio Refinement
Conagra focuses on boosting competency by reshaping the portfolio through significant inorganic moves. In sync with this, the company tries to acquire high-margin generating businesses and divest the less profitable ones. Apart from the divestiture, the company recently disclosed that it is exploring strategic alternatives to sell the Italian frozen pasta business — Gelit. Prior to this, the company exited private label brands and non-key businesses including Spicetec as well as JM Swank and executed Lamb Weston’s spin-off in 2016. Moreover, the company concluded the sale of the Canadian Del Monte processed fruit and vegetable business to Bonduelle Group during the first quarter of fiscal 2019.
Meanwhile, Conagra is carrying out buyouts to enhance business strength. On this front, the company completed the acquisition of Pinnacle Foods in October 2018. The consolidation of these food companies is likely to create a robust portfolio of leading, iconic and on-trend brands as well as exploit long-term benefits in the frozen foods space. Markedly, including the impacts from Pinnacle Foods’ acquisition, Conagra anticipates net sales to grow 22-23% in fiscal 2019. Previously, the company acquired Angie's Artisan Treats, LLC, which is strengthening the snacking business. Also, the buyout of Sandwich Bros is boosting the frozen business. In fact, contributions from the buyouts of Angie's BOOMCHICKAPOP and the Sandwich Bros. drove the company’s second-quarter fiscal 2019 sales growth by about 200 basis points.
Conagra Brands Inc. Price and Consensus
Conagra Brands Inc. Price and Consensus | Conagra Brands Inc. Quote
Will Efforts Revive the Stock?
Escalated input costs are a persistent threat to Conagra. During the second quarter, it witnessed input cost inflation of nearly 2.9%. Notably, the company saw a rise in transportation and warehousing expenses. Higher costs of packaging and certain ingredients also weighed on gross margin in the said period. Well, the company anticipates input cost inflation to be 3.0-3.2% in fiscal 2019, which is a threat to margins. Apart from this, sales in the Foodservice segment are witnessing year-over-year declines for four straight quarters due to soft volumes. Thanks to such headwinds, the company’s shares have plunged nearly 27% in the past three months. Well, rising input costs have also been plaguing the performance of other players from the Food-Miscellaneous space such as Campbell Soup (CPB - Free Report) , Lamb Weston (LW - Free Report) and General Mills (GIS - Free Report) .
Nevertheless, we believe that this Zacks Rank #3 (Hold) company’s portfolio refinement efforts combined with the unique value-over-volume strategy will help tide over the aforementioned hurdles.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>