Conagra Brands, Inc.
CAG
$14.86
-1.78%
Conagra Brands, Inc. is a packaged food company operating predominantly in the United States, generating roughly 91% of fiscal 2025 revenue domestically, with a portfolio spanning frozen meals (Marie Callender's, Healthy Choice, Banquet, Birds Eye), snacks (Slim Jim, Orville Redenbacher's), and shelf-stable staples (Duncan Hines, Hunt's, Vlasic, Reddi-wip, Wish-Bone). As one of the largest branded food manufacturers in North America, Conagra is a mature, dividend-paying defensive staple rather than a growth story, competing on brand equity and shelf space against peers like General Mills, Kraft Heinz, and Campbell's. The current investor narrative is dominated by distress signals: an unexpected CEO replacement in April 2026, a 52-week low hit on disappointing earnings and a weak outlook, and a shockingly high dividend yield that commentators have flagged as a sign of potential financial distress rather than value. With a deeply negative trailing EPS driven by a massive Q4 goodwill/impairment charge, the debate centers on whether this is a deep-value turnaround or a value trap facing structural portfolio obsolescence and possible dividend reduction.…
CAG
Conagra Brands, Inc.
$14.86
Related headlines
Investment Opinion: Should I buy CAG Today?
Rating: Hold. The core thesis is that Conagra offers deep-value metrics and strong cash flow, but faces significant structural challenges and a CEO transition that create too much uncertainty for a Buy. The analyst consensus is "hold" with an average target of $14.35, implying 5.2% downside from the current price of $15.13, suggesting the stock is fully valued at best.
Supporting evidence: The forward PE of 9.72x is a 30-40% discount to the sector, and the PS ratio of 0.557x is well below the 1.5x-2.5x typical for branded foods. Revenue growth is modest at 3.61% YoY in Q4 FY2026, but gross margins are stable at 23.9%. Free cash flow is robust at $842 million TTM, covering the dividend. However, the 10.66% dividend yield and negative payout ratio signal distress, and the current ratio of 0.904 is a liquidity concern.
Risks: The biggest risks are a dividend cut, continued volume declines, and failure of the new CEO to turn around the portfolio. The rating would upgrade to Buy if the forward PE compresses below 8x or if revenue growth accelerates above 5% with margin expansion. It would downgrade to Sell if the dividend is cut or if the stock breaks below $12.53. The stock appears fairly valued to slightly overvalued relative to its own history and peers, given the execution risks.
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CAG 12-Month Price Forecast
Conagra presents a classic value trap dilemma: deep-value metrics and strong cash flow are offset by structural challenges, a CEO transition, and a dividend that may be cut. The stock's negative beta and defensive nature offer some portfolio diversification, but the lack of a clear catalyst for a turnaround keeps us neutral. We would upgrade to bullish if the new CEO outlines a credible plan to restore growth and margins, or if the dividend is maintained with improved guidance. We would downgrade to bearish if the dividend is cut or if revenue declines accelerate.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Conagra Brands, Inc.'s 12-month outlook, with a consensus price target around $14.41 and implied upside of -3.0% versus the current price.
Average Target
$14.41
0 analysts
Implied Upside
-3.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$12 - $23
Analyst target range
Sixteen analysts cover Conagra, and the consensus recommendation is "hold" with a recommendation mean of 3.29 (where 1 is strong buy and 5 is strong sell), indicating a neutral-to-cautious stance. The average price target is $14.35, which implies roughly -5.2% downside from the current price of $15.13 — a rare situation where the consensus target sits below the market price, signaling that analysts collectively believe the stock is overvalued even after its 19.3% one-year decline. The consensus leans bearish in practice despite the "hold" label, with the average target below spot suggesting the market is pricing in more optimism than the analyst community endorses.
The target range spans $12.00 to $23.00, a wide $11 spread that signals high uncertainty about the company's trajectory. The high target of $23.00 (roughly 52% above spot) would require successful execution of the CEO transition, margin recovery, and multiple re-rating toward historical norms — essentially a full turnaround thesis. The low target of $12.00 (about 21% below spot) prices in continued volume declines, margin compression, and possibly a dividend cut, aligning with the 52-week low of $12.53. Institutional ratings show a clear deterioration pattern: Bernstein downgraded to Underperform from Market Perform on 2026-06-03, and the most recent actions (Barclays Overweight on 2026-07-08, RBC Sector Perform, Deutsche Bank Hold) show a firm split between a lone bull and a wall of neutral-to-bearish ratings. The wide target spread combined with the recent downgrade and the below-spot consensus average suggests limited conviction and elevated downside risk, with the stock's negative beta (-0.033) offering little comfort since it means the shares won't benefit from broad market strength.
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Bulls vs Bears: CAG Investment Factors
The bear case currently has stronger evidence, driven by the analyst consensus target below the current price, the massive impairment charge, and the distress-signaling dividend yield. The bull case rests on deep-value metrics and strong cash flow, but these are offset by structural concerns about the portfolio and management transition. The single most important tension is whether the impairment is truly one-time and margins can stabilize, or if it signals a permanent impairment of the brand portfolio. Resolution of this question will determine whether the stock is a value trap or a turnaround opportunity.
Bullish
- Deep value on forward earnings: Forward PE of 9.72x is roughly 30-40% below the Consumer Defensive sector average in the mid-to-high teens, and PS ratio of 0.557x is a fraction of the 1.5x-2.5x typical for branded staples. This extreme discount prices in substantial pessimism, offering potential re-rating upside if earnings normalize.
- Strong free cash flow generation: TTM free cash flow is $842 million, with Q4 FY2026 generating $468.8 million on $564.4 million operating cash flow against only $95.6 million capex. This robust cash generation comfortably covers the $167.4 million quarterly dividend and supports debt reduction.
- Stable gross margins despite headwinds: Gross margin has held remarkably steady in the 23.4%-24.3% range over the last four quarters, including 24.35% in Q4 FY2026. This consistency suggests pricing power and cost management even amid inflationary pressures.
- Dividend covered by cash flow: The 10.66% dividend yield is covered by quarterly FCF of $468.8 million versus $167.4 million in dividend payments, implying a payout ratio of only ~36% of FCF. If the dividend is maintained, the yield offers substantial income.
Bearish
- Analyst consensus target below current price: The average analyst target of $14.35 implies 5.2% downside from the current $15.13, a rare bearish signal. With 16 analysts and a recommendation mean of 3.29 (hold/neutral), the consensus leans cautious despite the stock's 19.3% one-year decline.
- Massive impairment and negative earnings: Q4 FY2026 net loss of $1.617 billion (EPS -$3.37) was driven by a $2.93 billion impairment charge, pushing TTM net margin to -16.99% and operating margin to -14.43%. This reflects deep-seated portfolio challenges and potential overvaluation of past acquisitions.
- Dividend yield signals distress: The 10.66% dividend yield is widely viewed as a distress signal rather than value, with a negative payout ratio of -0.35. The market is pricing in a potential dividend cut, which would remove a key support for the stock.
- Weak liquidity and high leverage: Current ratio of 0.904 is below 1.0, indicating potential near-term liquidity strain, while debt-to-equity of 1.14 is elevated. Interest expense of $94.1 million in Q4 alone consumes a significant portion of operating income.
CAG Technical Analysis
Conagra is in a sustained downtrend over the trailing year, with a 1-year price change of -19.31% versus a +15.01% gain for SPY, producing a staggering -34.32% relative strength gap. At the current price of $15.13, the stock sits at just 33.4% of its 52-week range ($12.53 low to $20.32 high), meaning it is trading in the lower third of its annual band — a positioning that reflects persistent distribution and failed rallies rather than momentum leadership. The stock's max drawdown of -37.16% over the period underscores how punishing the decline has been for holders, and the fact that price remains 25.5% below the 52-week high signals that overhead supply remains heavy.
Short-term momentum is deteriorating even as the 3-month trend shows a modest bounce: the 1-month change is -6.72% while the 3-month change is +14.62%, a clear deceleration that suggests the spring/summer recovery is rolling over. This divergence is meaningful — the stock rallied from its April low near $12.53 to a high of $16.67 on August 24, but has since given back roughly 9.2% from that peak, with the last five sessions sliding from $16.18 to $15.13. Relative strength versus SPY is negative across every window except the 3-month period (+12.62%), confirming that the recent bounce was a mean-reversion trade within a larger downtrend rather than a genuine trend reversal.
Key technical support sits at the 52-week low of $12.53, which also coincides with the April capitulation area; a breakdown below that level would likely trigger momentum-driven selling and open the door to new lows. Resistance is defined by the 52-week high of $20.32, with intermediate resistance around the August swing high of $16.67 — a breakout above $16.67 would be the first constructive signal that the downtrend is exhausting. Notably, the stock's beta of -0.033 is essentially zero and slightly negative, meaning CAG has historically moved independently of (and marginally opposite to) the broader market; while this offers portfolio diversification benefits, it also means the stock will not be rescued by a rising market, and position sizing should reflect idiosyncratic company-specific risk rather than market beta.
Beta
-0.03
-0.03x market volatility
Max Drawdown
-37.2%
Largest decline past year
52-Week Range
$13-$20
Price range past year
Annual Return
-19.8%
Cumulative gain past year
| Period | CAG Return | S&P 500 |
|---|---|---|
| 1m | -9.6% | +1.0% |
| 3m | +10.6% | +5.4% |
| 6m | -3.0% | +17.8% |
| 1y | -19.8% | +16.5% |
| ytd | -14.1% | +13.4% |
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CAG Fundamental Analysis
Revenue is growing modestly but unevenly: the most recent quarter (Q4 FY2026, ended 2026-05-31) posted revenue of $2.882 billion with 3.61% YoY growth, but the multi-quarter trend is choppy — Q3 was $2.788 billion, Q2 was $2.979 billion, and Q1 was $2.633 billion, with the year-ago Q2 at $3.195 billion representing a sharp sequential decline. Segment data shows the core is concentrated in Refrigerated and Frozen ($2.257 billion) and Grocery and Snacks ($2.234 billion), with International ($457 million) and Foodservice ($567 million) as smaller contributors. The growth trajectory is essentially flat-to-low-single-digit, which for a mature packaged foods company implies the investment case rests on margin recovery and cash return, not top-line acceleration — and the weak outlook accompanying the CEO transition suggests management sees continued volume pressure ahead.
Profitability has been severely impaired by a one-time charge: Q4 FY2026 net income was -$1.617 billion with EPS of -$3.37, driven by a $2.93 billion other-expense line (impairment/goodwill write-down) that pushed operating income to -$2.627 billion and EBITDA to -$2.075 billion. Excluding that charge, the underlying business is profitable — Q3 FY2026 generated $199.8 million of net income (7.17% net margin) and $424.6 million of EBITDA, while gross margin has been remarkably stable in the 23.4%-24.3% range across the last four quarters. However, the TTM net margin of -16.99% and operating margin of -14.43% reflect the impairment's distortion, and the gross margin of 23.9% is thin for branded packaged foods, leaving limited buffer against input-cost inflation (a theme flagged in recent fertilizer/food-cost news).
Balance sheet and cash flow metrics reveal a leveraged but cash-generative business: debt-to-equity stands at 1.14, the current ratio is a tight 0.904 (below 1.0, indicating potential near-term liquidity strain), and ROE is -30.14% on a trailing basis (distorted by the impairment) versus a positive ROA of 4.40%. Free cash flow TTM is a healthy $842 million, and the most recent quarter generated $468.8 million of FCF on $564.4 million of operating cash flow against just $95.6 million of capex — a strong conversion ratio. The critical tension is the dividend: with $167.4 million paid out quarterly against $468.8 million of quarterly FCF, the payout is currently covered, but the 10.66% dividend yield and negative payout ratio (-0.35) signal the market is pricing in a cut, and the company has been actively repaying debt ($293.8 million in Q3), which competes with dividend obligations for cash.
Quarterly Revenue
$2.9B
2026-05
Revenue YoY Growth
+3.6%
YoY Comparison
Gross Margin
24.3%
Latest Quarter
Free Cash Flow
$842000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CAG Overvalued?
Because trailing net income is negative (-$1.617 billion in Q4 FY2026), the PE ratio is not meaningful — the trailing PE of -3.28 and EV/EBITDA of -8.19 are artifacts of the impairment charge and should be disregarded. The appropriate primary metric is therefore the PS ratio, which stands at 0.557x on a trailing basis, or the forward PE of 9.72x based on estimated EPS of $1.62, which is the cleanest read on normalized earnings power. The gap between the negative trailing PE and the positive 9.72x forward PE implies the market expects the impairment to be non-recurring and earnings to normalize, but the low absolute forward multiple also signals skepticism about the durability of that recovery.
On a peer-relative basis, the PS ratio of 0.557x is deeply discounted versus the packaged foods sector, where branded staples typically trade at 1.5x-2.5x sales; even the EV/Sales of 1.287x sits below the sector norm. The forward PE of 9.72x compares favorably to the broader Consumer Defensive sector average in the mid-to-high teens, representing a roughly 30-40% discount. This discount is at least partially justified: Conagra's gross margin of 23.9% is below the 30%+ typical of premium branded food peers, its current ratio of 0.904 is weaker than the sector's typical 1.2-1.5x, and its 10.66% dividend yield is a distress signal rather than a value signal — the market is pricing in elevated execution and balance-sheet risk.
Historically, Conagra's own valuation band has compressed dramatically: the PS ratio was 2.18x in Q4 FY2026 (pre-impairment), 3.24x in Q3 FY2026, and 3.48x in Q1 FY2026, versus the current 0.557x — a collapse to a fraction of prior levels. The PE ratio history shows a similar pattern, ranging from 8x-21x in profitable quarters (Q1 FY2025 at 14.09x, Q4 FY2025 at 10.37x) down to negative territory now. This places the stock at the very bottom of its own historical valuation band, which could represent a genuine deep-value opportunity if the impairment proves one-time and margins stabilize — or a value trap if the portfolio struggles and the dividend is cut, in which case the market's pessimistic multiple may prove justified.
PE
-3.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 8x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-8.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant. The company's current ratio of 0.904 is below 1.0, indicating potential liquidity strain, and debt-to-equity of 1.14 is elevated. The Q4 FY2026 impairment charge of $2.93 billion wiped out shareholders' equity, resulting in a negative ROE of -30.14% and a TTM net margin of -16.99%. While free cash flow of $842 million is healthy, the 10.66% dividend yield and negative payout ratio suggest the market expects a dividend cut, which would further pressure the stock.
Market and competitive risks are pronounced. The stock trades at a forward PE of 9.72x, a discount to peers, but this may be justified given the 23.9% gross margin, which is below the 30%+ typical of premium branded food peers. The negative beta of -0.033 means the stock won't benefit from market rallies, and its 1-year relative strength versus SPY is -34.32%. Recent news highlights the unexpected CEO replacement and weak outlook, with analysts downgrading the stock (Bernstein to Underperform on 2026-06-03). The competitive landscape is intense, with private label and other brands pressuring Conagra's outdated portfolio.
Worst-case scenario: A breakdown below the 52-week low of $12.53 could trigger momentum selling, especially with a short ratio of 4.63. The analyst low target is $12.00, implying 20.7% downside from the current price. If the dividend is cut and earnings fail to recover, the stock could fall to $10-$12, representing a 20-34% loss from current levels. The max drawdown over the past year was -37.16%, indicating the potential severity of a downturn.
FAQ
The most severe risk is a dividend cut, which would likely trigger a sharp selloff given the 10.66% yield. Financial risks include a current ratio of 0.904 and debt-to-equity of 1.14, indicating tight liquidity. Operational risks stem from the CEO transition and a portfolio that may be structurally challenged, as evidenced by the $2.93 billion impairment. Competitive risks include private label pressure and changing consumer preferences. Macro risks are low due to the negative beta, but input cost inflation could further pressure margins.
Our 12-month forecast has a base case (55% probability) of $13-$16, assuming flat revenue growth and a maintained dividend. The bull case (20% probability) targets $18-$23 if the new CEO successfully revitalizes the portfolio and margins expand. The bear case (25% probability) targets $10-$12.50 if the dividend is cut and volumes decline further. The most likely scenario is the base case, with the stock trading in a range as the market awaits clarity on strategy. Key assumptions include stable gross margins near 24% and no major acquisitions.
On a forward PE basis, CAG trades at 9.72x, a 30-40% discount to the Consumer Defensive sector average. The PS ratio of 0.557x is also well below the 1.5x-2.5x typical for branded foods. However, this discount is justified by a 23.9% gross margin (below peers), a current ratio of 0.904, and a 10.66% dividend yield that suggests financial distress. The market is pricing in a high probability of a dividend cut and continued operational challenges. Relative to its own history, the stock is at the bottom of its valuation band, but without a turnaround, it may remain cheap.
CAG is not a clear buy at current levels. The analyst consensus target of $14.35 implies 5.2% downside from the $15.13 price, and the 10.66% dividend yield signals distress. However, the forward PE of 9.72x and PS ratio of 0.557x are deep-value metrics that could attract contrarian investors. The biggest downside risk is a dividend cut, which could push the stock toward the 52-week low of $12.53. For income investors willing to accept risk, the yield is enticing, but the lack of a catalyst makes it a hold at best.
CAG is more suitable for long-term value investors who can tolerate volatility and potential dividend cuts. The negative beta (-0.033) and defensive nature make it a portfolio diversifier, but the lack of growth and high yield suggest it's not a short-term trading vehicle. Earnings visibility is low due to the CEO transition, and the stock has a max drawdown of -37.16% over the past year. A minimum holding period of 2-3 years is recommended to allow for a potential turnaround. Short-term traders might find opportunities around earnings or news, but the risk/reward is unfavorable.
