WEBULL

Conagra Brands (CAG): Reassessing Valuation After Analyst Downgrade, Debt Cuts, and Mounting Inflation Pressures

Simply Wall St · 2d ago

Conagra Brands (CAG) is back in the spotlight after a fresh analyst downgrade put its inflation challenges, slow growth, and sizable debt load under the microscope, even as management highlights what it describes as meaningful recent net debt reduction.

See our latest analysis for Conagra Brands.

At a share price of $17.44, Conagra’s 1 day share price return of 1.87 percent and 1 month share price return of 2.71 percent look like a modest bounce within a much weaker backdrop. Its 1 year total shareholder return of negative 32.77 percent signals that sentiment and momentum remain under pressure despite the recent analyst downgrade and ongoing debt reduction efforts.

If this defensive name feels stuck in the mud, it could be worth seeing what else is moving, starting with auto manufacturers through auto manufacturers.

With shares trading at a steep discount to past highs and analyst targets, but facing falling unit sales and shrinking returns, is Conagra a classic value opportunity or simply fairly valued as markets price in weaker future growth?

Most Popular Narrative Narrative: 13.8% Undervalued

With Conagra Brands last closing at $17.44 versus a narrative fair value of about $20.22, the valuation argument leans on long term cash generation and stable margins.

Ongoing productivity improvements, equal to 4% of cost of goods sold, can offset inflationary pressures, supporting margin expansion and helping to boost net earnings.

Continued strong cash flow allows Conagra Brands to prioritize debt reduction, which could decrease interest expenses, thereby improving net income and contributing positively to earnings per share (EPS) growth.

Read the complete narrative.

Want to see the engine under this valuation? It hinges on shrinking revenues yet resilient margins, plus a future earnings multiple that challenges today’s pessimism. Curious?

Result: Fair Value of $20.22 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that story could unravel if inflationary pressures reaccelerate or supply chain costs stay elevated, squeezing margins and undercutting the long term cash flow thesis.

Find out about the key risks to this Conagra Brands narrative.

Build Your Own Conagra Brands Narrative

If this perspective does not quite fit your view, or you would rather dig into the numbers yourself, you can build a custom take in just a few minutes using Do it your way.

A great starting point for your Conagra Brands research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Before you move on, give yourself an edge by scanning fresh opportunities with Simply Wall Street’s tailored screeners so you are not stuck watching from the sidelines.

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.