Conagra Brands (CAG) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Conagra Brands (CAG)? Shares have been on the move with the stock up 3.9% over the past month. The stock hit a new 52-week high of $40.78 in the previous session. Conagra Brands has gained 3.3% since the start of the year compared to the -3.3% move for the Zacks Consumer Staples sector and the 5.4% return for the Zacks Food - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 5, 2023, Conagra Brands reported EPS of $0.81 versus consensus estimate of $0.66 while it beat the consensus revenue estimate by 1.35%.
For the current fiscal year, Conagra Brands is expected to post earnings of $2.46 per share on $12.21 billion in revenues. This represents a 4.24% change in EPS on a 5.82% change in revenues. For the next fiscal year, the company is expected to earn $2.59 per share on $12.34 billion in revenues. This represents a year-over-year change of 5.39% and 1.09%, respectively.
Valuation Metrics
Conagra Brands may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Conagra Brands has a Value Score of A. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.3X current fiscal year EPS estimates, which is not in-line with the peer industry average of 18.4X. On a trailing cash flow basis, the stock currently trades at 12.7X versus its peer group's average of 12.3X. Additionally, the stock has a PEG ratio of 2.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Conagra Brands currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Conagra Brands meets the list of requirements. Thus, it seems as though Conagra Brands shares could still be poised for more gains ahead.
How Does CAG Stack Up to the Competition?
Shares of CAG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Mamamancini'S Holdings, Inc. (MMMB). MMMB has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of D.
Earnings were strong last quarter. Mamamancini'S Holdings, Inc. beat our consensus estimate by 400%, and for the current fiscal year, MMMB is expected to post earnings of $0.14 per share on revenue of $94.27 million.
Shares of Mamamancini'S Holdings, Inc. have gained 63.7% over the past month, and currently trade at a forward P/E of 61.67X and a P/CF of 86.57X.
The Food - Miscellaneous industry is in the top 33% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CAG and MMMB, even beyond their own solid fundamental situation.
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Conagra Brands (CAG) : Free Stock Analysis Report
Mamamancini'S Holdings, Inc. (MMMB) : Free Stock Analysis Report
