Is Big Food Making Money at Conagra? — Market Mad House

In theory big food companies such as Conagra Brands Inc. (NYSE:CAG) appear to be a perfect value investment.

To explain, Conagra makes a product everybody needs all the time; food. Thus, Conagra has a recession-proof business with a mass market. However, to be a value investment Conagra needs to make money.

Currently, Conagra (NYSE: CAG) makes money. For instance, Conagra reported a quarterly gross profit of $797 million on quarterly revenues of $2.82 billion on 30 November 2019. In addition, Conagra reported an operating income of $439.4 million and net income after tax of $233.9 million for the quartered ending on 30 November 2019.

Is Conagra a Value Investment?

Thus, Conagra makes money and its stock is cheap. Mr. Market was paying $32.69 for Conagra shares on 23 January 2020.

Additionally, Conagra generates cash. It reported an ending cash flow of $127.3 million and an operating cash flow of $220.5 million for the quarter that ended on 30 November 2019.

However, Conagra keeps little cash. For instance, Conagra reported $192 million in cash and short-term investments on 30 November 2019. Therefore, I conclude Conagra is not a value investment. In my opinion, a company needs to be cash-rich to be a…