Conagra Brands (CAG:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Conagra Brands(CAG:NYS)

Consumer Defensive:Packaged Foods

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Close Price/Date
$37.13 (USD) 09/07/2020

Weighted Valuation
$35.75 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 3.7%

Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $35.75 this stock is Fairly valued

Company Overview (CAG:NYS USD)

Price 37.13
Range 37.13 – 37.13
52 week 24.14 – 38.77
Open 37.13
Vol / Avg. 0/2.42M
Mkt cap 18.14B
P/E 21.59
Div/yield 0.85/0.02
EPS 1.72
Shares 488.48M
Beta 0.86

Company Description

Conagra Brands Inc is a packaged food company that operates predominantly in the United States (92% of revenue and 94% of profits). It has a significant presence in the freezer aisle, with brands such as Marie Callender’s, Healthy Choice, Banquet, and Birds Eye. Popular center-of-store brands include Duncan Hines, Hunt’s, Slim Jim, Vlasic, Orville Redenbacher’s, and Chef Boyardee. While the majority of revenue is sold into the U.S. retail channel, 11% of sales are to the food-service channel.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for CAG:NYS

Using a discounted cash flow model we generated an intrinsic value of $46.44 (USD) for CAG:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

CAG:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $46.44 1% 5% 1% 5%
WACC (or Ke) 5.99 $60.52 $37.05
Terminal Growth Rate 1.00 $37.92 $59.22
Tax Rate 0.19 $49.96 $42.92
Cash Flow 1,982,455,214 $43.20 $49.67
Capital Expenditures -309,200,000 $45.98 $46.89
Long Term Debt 4,974,100,000 $46.95 $45.93

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $66.22 (USD) for CAG:NYS. We also generated a valuation of $76.66 (USD) using other metrics and comparables.
The comparable companies were Campbell Soup (CPB:NYS), Flowers Foods (FLO:NYS), General Mills (GIS:NYS), Lancaster Colony (LANC:NAS) and McCormick & Co (MKC:NYS).

Company CAG:NYS End Date Value
Earnings/Share $1.72 (USD)
Book Value/Share $16.12 (USD)
Sales/Share $22.62 (USD)
Cash Flow/Share $3.77 (USD)
EBITDA/Share $3.78 (USD)
Price Based on Comps Adjustment Factor (%)
$58.64 (USD) 22.9
$89.89 (USD) -17.9
$62.57 (USD) -0.4
$46.92 (USD) -39.2
$77.61 (USD) 43.2
21.59 PE Ratio 34.09 29.01 51.17 17.74 36.25 36.30
2.30 PB Ratio 5.58 5.58 3.81 4.79 6.33 7.37
1.64 PS Ratio 2.77 1.73 1.20 2.20 3.71 5.00
9.85 PCF Ratio 17.84 10.50 11.74 10.54 29.01 27.43
14.89 EV to EBITDA 20.51 14.53 21.11 13.86 26.88 26.17


Using a multiples approach we generated a valuation of  $47.86 (USD) for CAG:NYS

Company CAG:NYS End Date Value
Earnings/Share $1.72 (USD)
Book Value/Share $16.12 (USD)
Sales/Share $22.62 (USD)
Cash Flow/Share $3.77 (USD)
EBITDA/Share $3.78 (USD)
Price Based on Comps Adjustment Factor
$36.49 (USD) 0
$61.65 (USD) 0
$33.98 (USD) 0
$49.47 (USD) 0
$57.70 (USD) 0
Ratios Ratio Average
PE Ratio 21.22
PB Ratio 3.82
PS Ratio 1.50
PCF Ratio 13.12
EV to EBITDA 15.25

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  CAG:NYS for the last 10 years was  3.62

We ran the Adjusted Book Value for  CAG:NYS and generated a book value of  $16.17 (USD)
By multiplying these we get an adjusted valuation of  $58.60 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for CAG:NYS. The 4 analysts have a concensus valuation for CAG:NYS for 2021 of $35.75 (USD).

CAG:NYS Conagra Brands

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 4 0 3.4000 Hold 2020-9-4

Current Price: 37.13 USD

Analyst Consensus
USD Millions 2021 2022
Mean EPS 2.31 2.48
# EPS Analysts 5 3
Mean Revenue 10,624.90 10,810.10
# Revenue Analysts 4 2
Mean Target Price 35.75
Mean Cash Flow 2.96 3.32
Mean EBITDA 2,122.50 2,288.60
Mean Net Income 1,104.00 1,244.10
Mean Debt Outstanding 8,695.10 7,746.20
Mean Tax Rate
Mean Growth Rate 6.67
Mean Capital Expenditure 357.90 315.80

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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