J.P. Morgan Reiterates Overweight Rating on ConAgra Foods Following 4Q13 EPS Results

In a report published Thursday, J.P. Morgan analyst Ken Goldman reiterated an Overweight rating on ConAgra Foods CAG.

In the report, J.P. Morgan noted, “ConAgra reported 4Q13 EPS this morning. Though pro forma EPS of $0.60 were 1c above the Bloomberg consensus, the quality of earnings was a bit light, by our read. Guidance for next year also is light; however, most of the miss will come from the unpredictable Commercial Foods segment and dilution from Ardent Mills, not Consumer Foods or Ralcorp, as perhaps some expected. And management said EPS will grow 10%+ each year over 2015-17, which may be greater than anticipated. It also said to expect $300MM in long-term Ralcorp cost synergies vs prior $225MM. Overall, we see the release as mixed. On one hand, the quality of 4Q13 was squishy and guidance for FY14 was light. But on the other hand, given how relatively inexpensive the shares are (13.7x NTM P/E), that FY14's softness will come from Comm'l Foods rather than Consumer/Ralcorp, the strong FY15-17 guidance, and the higher long-term expectation for Ralcorp cost synergies, some positives are here too.”

ConAgra Foods closed on Wednesday at $33.35.