Is Conagra Brands, Inc. (CAG) A Cheap Food Stock to Buy According to Hedge Funds?

Conagra Brands, Inc. (CAG) has been a subject of interest among investors and hedge funds alike, with many wondering if the food stock is a bargain or a risky bet. To determine if CAG is a cheap food stock to buy, we must analyze the company's financial performance, market position, and the views of hedge funds and analysts.



Conagra Brands' stock price has been volatile over the past year, with a return of -10.8% compared to the industry's -10.8% and the market's 22.3% (Simply Wall St). The stock has also shown lower weekly price movements compared to the food industry and the overall market, indicating relative stability but also limited upside potential. As of July 13, 2024, CAG's stock was trading at $28.35, down 1.1% from the beginning of the year (MarketBeat).



Financial Performance and Market Position
Conagra Brands has reported mixed financial results over the past year. The company's Q4 2024 earnings per share (EPS) of $0.61 exceeded analysts' expectations of $0.57, indicating some operational efficiency and cost management success. However, revenue for the quarter fell by 2.3% year-over-year to $2.91 billion, highlighting ongoing challenges in maintaining sales volume (Investopedia).

The company's fiscal 2024 performance was marked by a net loss of $567.3 million in Q4, compared to a profit of $37.5 million in the same quarter the previous year. This significant loss was attributed to goodwill and impairment charges in its grocery and snacks, as well as refrigerated and frozen divisions (Just-Food). For the full year, Conagra's net sales decreased by 1.8% to $12.05 billion, and organic net sales dropped by 2.4%. Net income declined by 49.2% to $347.2 million (Simply Wall St).

Conagra Brands operates in a highly competitive consumer goods sector, facing stiff competition from companies like General Mills, Hormel Foods, and Tyson Foods. CAG's market share has decreased by 9.79% over the past 12 months ending Q1 2024, and by 158.94% in Q1 2024 compared to Q4 2023 (CSIMarket). This decline in market share underscores the competitive pressures and challenges the company faces in maintaining its position.



Hedge Funds' Views on Conagra Brands
As of February 24, 2025, there are 1,542 funds or institutions reporting positions in Conagra Brands. This is an decrease of 20 owner(s) or 1.28% in the last quarter. Average portfolio weight of all funds dedicated to 0I2P is 0.19%, an increase of 6.27%. Total shares owned by institutions increased in the last three months by 2.99% to 474,642K shares (Fintel).

The average analyst rating for Conagra Brands from these 9 stock analysts is "Hold," which reflects the hedge funds' cautious stance on the stock. This consensus rating suggests that hedge funds believe CAG is likely to perform similarly to the overall market, rather than outperforming or underperforming it.

The average price target for Conagra Brands is $27.38, which is 7.20% higher than the current price. This indicates that hedge funds expect the stock to appreciate in the near term. However, the relatively low price target difference and the "Hold" rating suggest that hedge funds are not overly optimistic about the stock's potential.



Conclusion
Conagra Brands presents a complex investment case characterized by a mix of strong brand performance in certain segments, financial challenges, and a cautious outlook for fiscal 2025. While the company has shown resilience in specific areas, potential investors must weigh the positive aspects against the broader market and economic challenges that Conagra faces.

Hedge funds' investment strategies and risk tolerance influence their views on Conagra Brands' stock. The average analyst rating of "Hold" and the modest price target difference suggest that hedge funds are cautious about the stock's prospects. However, the increase in institutional ownership and the expectation of a 7.20% price increase indicate that some hedge funds see value in the stock.

Ultimately, the decision to invest in Conagra Brands depends on individual investors' risk tolerance and investment goals. While the stock may present an opportunity for those seeking a cautious, long-term investment in the food sector, it may not be suitable for investors seeking aggressive growth or short-term gains. As always, it is essential to conduct thorough research and consider seeking the advice of a financial professional before making any investment decisions.