CAG Eyes Expansion, Invests $100M - Analyst Blog
September 25 2012 - 11:25AM
Zacks
Shares of ConAgra Foods
Inc. (CAG), one of the leading processed and packaged food
makers in North America, inched up 2 cents after the food company
announced expansion worth roughly $100 million in Russellville,
Arkansas.
The company intends to expand its
plant in the Russellville area to accommodate making of Bertolli
and P.F. Chang's frozen meals. The expansion is likely to create at
least 80 new jobs. ConAgra’s presence in this part of world can be
dated back to 1965 with roughly 1,350 employees working for it
currently.
In August 2012, ConAgra Foods
completed the acquisition of Home Menu frozen meals
brands--Bertolli® and P.F. Chang’s® from Unilever
plc (UL) for a total cash consideration of $267 million.
The acquisition of frozen meals businesses includes a license for
use of the Bertolli brand name in favor of ConAgra. Also, the
acquisition entails transfer of Unilever’s existing license for use
of Home Menu brand name of P.F. Chang to the food maker.
Such strategic acquisitions, which comprehensively embrace the
principal businesses along with the use of licenses, add value to
ConAgra; helping the company to further expand its portfolio of
Marie Callender’s®, Banquet®, Healthy Choice®, Slim Jimand Kid
Cuisine®.
ConAgra Foods Inc. with its wide
array of brands in almost 97% of America’s households, serves
grocery retailers, restaurants and other foodservice
establishments. Thus, the company’s strategic acquisitions fit in
well with the existing capabilities of ConAgra Foods as it expands
its business portfolio and presence across the food market.
Moreover, its promotional campaigns, strong sales force, dedicated
customer-serving teams, and category leadership continue to add
depth and dynamism to its existing product lines.
The current Zacks Consensus
Estimate for the fiscal second quarter of 2013 (ending November
2012) is 53 cents, representing a year-over-year increase of 13.4%.
Estimates for fiscal 2013 and 2014 are $2.06 and $2.15, reflecting
annual growth of 12.1% and 4.4%, respectively.
We have a Neutral recommendation on
ConAgra over the long term. Also, ConAgra has a Zacks #2 Rank,
implying a short-term (1-3 months) Buy rating. The company’s prime
competitors are HJ Heinz Co. (HNZ) and
Kraft Foods Inc. (KFT).
CONAGRA FOODS (CAG): Free Stock Analysis Report
HEINZ (HJ) CO (HNZ): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
UNILEVER PLC (UL): Free Stock Analysis Report
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