Saturday, March 22, 2014

What ConAgra Needs to do to Convince Investors

Investors in ConAgra Foods  must wonder what on earth will come next. The company's update in February outlined a litany of problems that ran though its existing operations, through its acquired businesses, and even to the future formation of a joint venture. Value-seeking investors may ask whether these problems mark the trough of ConAgra's difficulties, and if the stock offers good value.

ConAgra's list of problems
Many of the company's problems don't indicate anything new, rather they show a failure to rectify ongoing issues. For example, in a previous article in July, readers learned of the three big risks associated with the stock. In short, ConAgra struggled to generate sales growth in its consumer-foods division. Moreover, its acquisition of private-label manufacturer Ralcorp produced results that came in below expectations. Finally, it lost a major customer from its Lamb Weston (potato operations) unit within its commercial-foods segment.

Fast forward to the recent February update and the company faces these issues: