Stock Analysis
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Is Now The Time To Look At Buying Conagra Brands, Inc. (NYSE:CAG)?
Today we're going to take a look at the well-established Conagra Brands, Inc. (NYSE:CAG). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Conagra Brands’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Conagra Brands
Is Conagra Brands still cheap?
Great news for investors – Conagra Brands is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.13x is currently well-below the industry average of 20.74x, meaning that it is trading at a cheaper price relative to its peers. Conagra Brands’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Conagra Brands?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Conagra Brands' earnings over the next few years are expected to increase by 28%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since CAG is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on CAG for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CAG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that Conagra Brands is showing 2 warning signs in our investment analysis and 1 of those is a bit unpleasant...
If you are no longer interested in Conagra Brands, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
What are the risks and opportunities for Conagra Brands?
Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company in North America.
Rewards
Trading at 63.4% below our estimate of its fair value
Earnings are forecast to grow 15.13% per year
Risks
Debt is not well covered by operating cash flow
Large one-off items impacting financial results
Further research on
Conagra Brands
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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.
About NYSE:CAG
Conagra Brands
Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company in North America.
Undervalued average dividend payer.
