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

Daniel G. Jennings
5 min readJan 23, 2020

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 real value investment.

What Value does Conagra have?

Conagra has a vast amount of potential value in the form of the many food brands it owns.

The brands owned by Conagra include; SlimJim, Hunt’s tomatoes, Angie’s, Vlasic pickles, Reddiwip, Birdseye, Orville Redenbacher’s popcorn, Udi’s, Pam, Marie Callender, Van Camp’s, Van De Kamp’s, and Frontera, Egg Beaters, Fleischmann’s Yeast, P.F. Chang, and Duncan Hines. Therefore, Conagra fills the shelves of North America’s supermarkets.

How Amazon Threatens Conagra

Thus, Conagra faces a huge threat in the form of Amazon (NASDAQ: AMZN). For instance, Amazon and Instacart, allow people to shop for groceries without…

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Daniel G. Jennings

Daniel G. Jennings is a writer who lives and works in Colorado. He is a lifelong history buff who is fascinated by stocks, politics, and cryptocurrency.