ConAgra Foods, Inc. (NYSE:CAG) Beats Street Expectations For 2Q14 Earnings
ConAgra Foods, Inc. (NYSE:CAG) is a Omaha, Nebraska based food company that operates through for distinct business segments, namely Commercial Foods, Consumer Foods, Ralcorp Food Group, and Ralcorp Frozen Bakery Products. The stock has delivered around 13.5% returns year to date and yesterday it gained 5.28%, backed by the fantastic 2Q14 earnings release.
Earnings Highlights and Outlook
ConAgra Foods, Inc. (NYSE:CAG) stunned the street with strong quarterly sales figures for its Hunt’s ketchup and Marie Callender’s frozen meals. The company reported revenues of $4,713.9 million for 2Q14, well above the consensus estimate of $4,640 million. Sales were up 26.5% on a year over year basis.
Consumer Foods segment revenues fell 0.4% year over year during 2Q14 to $2,016.1 million, primarily due to flat volume and price-mix impacts. Commercial Foods revenues grew 3.1% to $1,574.0 million, thanks to the contribution from the newly added Ralcorp foodservice business.
ConAgra Foods, Inc. (NYSE:CAG) reported 16% increase in selling, general and administrative expenses and 12.1% increase in interest expenses during the 2Q14. Moreover cost of sales also grew more than 29% during the reported quarter on a year over year basis. Higher expenses dragged gross margin by 160 basis points.
Earnings per share, excluding items, for 2Q14 were $0.62 beating the street estimates of $0.55 per share.
ConAgra Foods, Inc. (NYSE:CAG) maintained its earnings per share guidance in the range of $2.34 to $2.38. Analysts were expecting the company to earn $2.33 per share.
Analysts at Zacks Equity Research maintain a “hold” rating for the stock of ConAgra Foods, Inc. (NYSE:CAG). However, the research firm mentioned, “The results, we believe, will induce positive reactions from the market driving the share price higher.”
Recently Zacks also upgraded its rating from “underperform” to “neutral” for the stock of Unilever plc (ADR) (NYSE:UL). The upgrade was largely based on decent 3Q13 earnings posted by the fast moving consumer goods giant.