CONAGRA BRANDS, INC. (CAG): what the price requires

The current priced-in claim for CONAGRA BRANDS, INC. (CAG) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CAG

Headline

FieldValue
TickerCAG
CompanyCONAGRA BRANDS, INC.
Current price$14.26/sh
CompositionFrozen 34% / Other shelf-stable 24% / Refrigerated 6% / Snacks 18% / International 8% / Foodservice 9%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (mid-cycle)15.8%
Trailing margin (depressed year)2.4%
Multiple paid8x mid-cycle operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 6% cost of capital with 4% terminal growth over a 5-year stage (computed at the 6% minimum rate; the CAPM rate 5.3% sits below it).

How unusual the bet is: within-range

ReferenceValue
vs own history-0.32σ
cohort percentile (of 69 peers)6
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.93x3justifies
Earnings3.74x3expensive
Relative0.31x2justifies
Growth1.52x5expensive

Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.7%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$9.361.52xyesFCF base $0.8B, growth -5% (input: historical growth), terminal g 0.5%, WACC 6.7%, 5yr projection
DCF Exit MultipleGrowth$16.510.86xyesExit EV/EBITDA: 29.4x / 31.4x / 33.4x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$46.610.31xyesP/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus
Simple DDMGrowth$14.191.00xyesDPS $1.40, g=-0.5% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$1.3510.56xyesStage 1: -54% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$17.020.84xyesReference only (book value floor): BV/sh $17.02, ROE negative
Two-Stage Excess ReturnAsset$15.310.93xyesReference only (book value with convergence): BV/sh $17.02, ROE converges to ke
Discounted Future Market CapGrowth$8.371.70xyesRev $11.2B, growth -5% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$26.640.54xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.47B × (1−13%) / WACC 6.7% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$0.011426.00xyesEBITDA $0.45B × sector EV/EBITDA 14.0x (excluded from median)
FCF YieldEarnings$3.813.74xyesFCF $842.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$2.575.55xyesSBC-adj FCF $0.79B (FCF $0.84B − SBC $0.06B) capitalized at Kₑ
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$4.003.57xyesBV $17.02 × (ROIC 1.6% / WACC 6.7%)
P/Sales SectorRelative$46.610.31xyesRevenue $11.18B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$7.6b
Net debt / NOPAT (after-tax)4.89x
Net debt / operating income (pre-tax)4.25x
Share count CAGR (buyback)-0.1%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 15.8%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The single decisive number for Conagra is the multiple, because everything else flows from how cheap the stock has become. At about $13 (June 27, 2026), the price values the company at roughly eight times its through-the-cycle operating income, a level so low it is below what even a steady annual decline in profit would justify, and in the lower half of where its packaged-food peers trade. The trailing reported margin looks dismal, near 3%, but that figure is depressed by non-cash impairments rather than the operating reality; on the company's own mid-cycle margins, closer to 16%, the business earns far more than the trough quarter suggests. Buying here means buying a collection of established food brands at a price that assumes permanent decline, when the underlying portfolio still generates substantial cash.

The portfolio itself is more resilient than the headline sales trend implies. Conagra spans frozen meals, shelf-stable grocery, refrigerated foods, snacks, and foodservice, and the most recent quarter showed organic net sales returning to growth of 2.4% even as reported sales slipped on divestitures and currency. The 10-K shows the scale of the franchise, with Grocery and Snacks net sales of $4.9 billion and Refrigerated and Frozen at $4.7 billion in fiscal 2025. These are categories people buy in good times and bad, and the frozen and snacking businesses in particular hold real shelf positions that retailers cannot easily replace. A return to organic growth, even modest, is the first evidence that the volume erosion of recent years is stabilizing.

Management is guiding toward an operating margin near the high end of its 11.0% to 11.5% range and adjusted earnings around $1.70 per share for the year. Against a $13 price, $1.70 of adjusted earnings is a high single-digit earnings yield before the dividend is even counted. If the company holds that margin, services its debt, and stabilizes volumes, the stock is priced for a recovery it does not need to be dramatic to deliver. The bull case does not require Conagra to grow quickly; it requires the market's assumption of decline to prove too pessimistic, and a low-teens price on a mid-teens normalized margin business leaves room for that.

Bear Case

Start with what the market is plainly telling you: a dividend yield above 10% is not a gift, it is a warning. Income investors do not leave a 10% yield on a stable consumer-staples name lying around unless they expect the payout to be cut, and the math behind that expectation is straightforward. Conagra is paying $1.40 a share against adjusted earnings guided to about $1.70, a payout ratio near 90%, while carrying roughly $7.6 billion of net debt. When a company is sending nearly all of its earnings out the door as dividends and still owes that much, the dividend and the balance sheet are competing for the same dollars, and something usually gives. Two major analysts have downgraded the stock specifically citing this pressure, one to underweight, with explicit concern about a dividend cut.

The operating squeeze that drives the worry is real and current. Conagra raised its cost-of-goods inflation outlook to about 7% for fiscal 2026, and its own filing concedes it may "not" be able to pass "this input cost inflation on a timely basis or at all" because the components of its cost of goods are subject to forces beyond its control. A packaged-food company facing 7% input inflation has two choices, raise prices and lose volume, or hold prices and lose margin, and in a market where consumers are trading down, neither is comfortable. The segment detail in the 10-K shows the pressure already biting: International net sales fell 11.3% and Foodservice fell 4.7% in fiscal 2025, with Grocery and Snacks segment gross profit down $86.6 million on lower sales. Reported net sales declined again in the most recent quarter.

Leverage is the multiplier on all of it. Net debt of about $7.6 billion sits near five times the company's normalized operating income, high for a slow-growth food maker, and it constrains the choices management has. The same divestitures that depress reported sales are partly an effort to manage that debt, but they also shrink the earnings base supporting it. The price looks cheap, and the asset-based methods support it, but the earnings-power method, the one that values the company on the profit it actually earns rather than the cycle-normalized figure, sits below the price, which is the cautious lens saying the cheapness reflects genuine deterioration. The bear case is not that Conagra disappears; it is that a high-debt, low-growth food company facing persistent inflation cuts its dividend to protect its balance sheet, removing the main reason many holders own it, and the stock that looks cheap on normalized earnings stays cheap because the normalization keeps getting pushed out.

Valuation

Conagra's valuation hinges on a single judgment: are its current earnings the real earnings, or a cyclical trough. The trailing operating margin near 3% is distorted by non-cash impairment charges, so the price is better read against the company's through-the-cycle margin, closer to 16%, on current revenue. On that normalized basis the stock trades at roughly eight times operating income, a multiple so low it sits below what even a steady annual decline in profit would warrant, and in the lower half of the packaged-food peer range. The market, in other words, is pricing Conagra as if its profits are set to erode, not merely stagnate.

The methods used to triangulate the price line up as a value-and-deterioration debate rather than a growth bet. The asset-based methods and the peer-multiple lens land above the price, marking the stock as cheap on book value and relative to its sector. The earnings-power method, which values the business on the profit it currently earns with no growth, lands below the price, which is the conservative methods registering that the recent results are weak for a reason. The dividend-discount methods add a complication worth naming: they only reach the price if the dividend holds, and a high-yield payout that the market doubts is precisely what is in question. The pattern says Conagra is genuinely inexpensive on its asset base and normalized earnings, while the cautious lenses warn that the discount is the market's verdict on real operating pressure, not an inefficiency.

Solvency is where the cheapness has to be tested, because it shapes the dividend decision. Net debt of about $7.6 billion is nearly five times normalized operating income, meaningful leverage for a company growing in the low single digits at best. The dividend costs roughly $1.40 per share against adjusted earnings near $1.70, so the company is distributing the large majority of its profit while servicing that debt. What a buyer at this price underwrites is one of two outcomes: either management holds the dividend and grinds the debt down slowly, in which case the high yield is collected while the multiple eventually re-rates, or it cuts the dividend to accelerate deleveraging, in which case the stock loses its income appeal in the near term but de-risks the balance sheet. The low multiple already reflects the second possibility; the question is whether it overstates it.

Catalysts

The dividend decision is the catalyst that overshadows the rest. Conagra is currently maintaining its payout at an annual $1.40 per share, a quarterly $0.35, but with a payout ratio near 90% and roughly $7.6 billion of debt, analysts have flagged a cut as a real near-term possibility, and at least two downgraded the stock on exactly that concern. A formal reaffirmation backed by improving cash flow would relieve the overhang; a cut would remove the income thesis but could be read as prudent deleveraging. Either way, the announcement moves the stock more than any sales figure.

The operating trajectory against guidance is the supporting signal. In the third quarter of fiscal 2026, organic net sales rose 2.4% even as reported sales fell 1.9%, and management narrowed full-year guidance to organic sales near the midpoint of its negative-1% to positive-1% range, an adjusted operating margin near the high end of 11.0% to 11.5%, and adjusted earnings of about $1.70 per share. The return of organic growth is the first tentative evidence of volume stabilization; whether it holds through the inflation pressure is the test.

Input costs are the external swing factor. Conagra raised its cost-of-goods inflation outlook to about 7% for fiscal 2026, and its ability to offset that through pricing without losing volume will determine whether the margin guidance holds. Commodity relief would ease the squeeze on both the margin and the dividend; continued inflation would tighten the bind the stock is already priced for.

Peer Cohorts (Per Segment, With Filing Citations)

Grocery & Snacks (reported)

Refrigerated & Frozen (reported)

Foodservice (reported)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Conagra Q3 FY2026 results · analyst research, 2026 · Conagra FY2025 10-K

View the full interactive CAG report on boothcheck