CEO Rodkin is not too enthused at all by the earnings outlook at Cag the next two years. He's told analysts
that next year may see a "low single digit" and the year after that --2016--a low to medium SINGLE digit rise.
such statements do not sit well with present shareowners. Rodkin thinks the current dividend will be maintained---but no hint of any increase.
This a a rough patch for Cag. Employee dismissals, both white and blue collar, are taking place. Cag has to meet heavy debt obigations--the Ralcorp mess again--and stock-buybacks are expected be reduced--or ended --for a while. The frozen product lines are be cut back--I see that almost every trip to the market. I got a Cag frozen yogurt for a buck today--it came out 1-[2 years ago at about $4.00+ Marie frozen meals are usually 2 for $5 and quite often 2 for $4,
Cag has to chop prices to keep competitive--keep sales moving.
You hardly every see any national ads (at least I dont) when it is vital that CAG INCREASE ad budgets. Thje company should axe the agency it has had--ads were mundane, un-creative, doubt if many consumers watched them. At least sales show they weren't impressed.
Nothing Rodkin or any brasshat has said to iindicate we can count on a strong sales/earnings report for 2 years anyhow. The big brass are never taken to task at the annual meeting --coming sept 19. Wish we had a
dynamic shareowner speak up and denounce the results and fix the blame as he sees it. The current topmanagement is getting a free ride---and the Board seems content. to let sleeping dogs lie and collect their fat paychecks and free stock . They sure like riding the gravy train and let the CEO go unrestrained.
That's a really good post.
They have TOO MANY different brands, making their advertising problem very difficult to solve.
yes, there is a problem with dramatically changing consumer preferences. I suppose there are not very many CAG skus for sale in Whole Foods. Every supermarket chain out there is trying to emulate Whole Foods, thus, there is less and less space available in existing stores for things like what CAG sells.
The Ralcorp deal has not worked very well...I don't really know why, but it looks like Stiritz took CAG to the cleaner and maybe stole the crown jewel while they weren't looking.
Still the stock is FAR too cheap here from a FCF yield perspective, in my view.
I anticipate that an activist could come in and find it really easy to split this company up and put the company name into the history books.
Of course, I may need to have alot of patience for that, and will run the risk of getting caught in a "value trap."
My main strategy here for now is to sell puts into volatility at strike prices that are well-supported by dividend yield. I made a nice trade following the recent earnings report selling some good put premium. It worked out nicely (I keep that stuff short term since te premium on the short ones burns away so much faster).