Conagra Brands (CAG): Assessing Valuation After Prolonged Share Price Weakness

Conagra Brands (CAG) has been catching the eye of investors recently, not because of any major news headline, but due to its persistent share price weakness. Sometimes, it is these quieter stretches that prompt investors to step back and ask what story the market is telling, and is it accurate? With familiar brands across grocery store shelves, Conagra rarely makes dramatic headlines, but the slow slide in its share price has started to raise questions about what happens next. Looking at the bigger picture, Conagra’s stock has lagged in the last year, driven by incremental declines rather than big shocks. The company’s shares have fallen around 41% over the past twelve months, part of a longer-term trend that has seen the stock lose ground over several years. There have been few catalysts to spark fresh momentum, despite a steady revenue base and a slight increase in net income. After a year of underperformance, the real question for investors is whether Conagra is now cheap for a reason or if the market is overlooking future growth potential. Is this recent weakness a buying opportunity, or is the stock pricing in tougher times ahead?

Most Popular Narrative: 11.6% Undervalued

According to the most widely followed narrative, Conagra Brands appears undervalued relative to its estimated fair value, with analysts seeing a notable upward gap between current price and justified valuation.

Strong consumer demand and steady consumption trends bode well for future revenue growth, suggesting that the company can maintain its top-line momentum even amidst a challenging economic backdrop.

This valuation hinges on bold financial assumptions and a profitability forecast that sets Conagra up for a dramatic strategic showdown. Want to know which future numbers, margins, and multiples analysts are betting on to call the stock “undervalued”? The full narrative breaks down the detailed forecasts and highlights one major turning point that could flip the story for good. Find out what could be the surprise catalyst behind this deep discount.

Result: Fair Value of $20.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent inflation and ongoing supply chain pressures could still derail Conagra’s margin outlook. This may challenge the optimistic case for a rebound.

Find out about the key risks to this Conagra Brands narrative.

Another View: Discounted Cash Flow Perspective

While the first assessment judges Conagra’s value based on analyst assumptions and market sentiment, our DCF model takes a different approach by focusing on the company’s long-term future cash flows. This method also suggests shares are undervalued. Are traditional price targets overlooking information that the fundamentals reveal?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Conagra Brands for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Conagra Brands Narrative

If you see the story differently or want to dig deeper into the numbers, you can build your own view in just a few minutes. Do it your way

A great starting point for your Conagra Brands research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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