Two Conagra directors just put their money where their mouth is. Director Richard H. Lenny purchased 25,000 CAG stock units at $14.34 each on April 14, worth $358,500 in total. Director John J. Mulligan bought 17,500 units at $14.31 the same day, spending $250,425.
The combined outlay of roughly $609,000 came as the stock sat near a 12-month low of $14.04. For Mulligan, the purchase represented a 542% increase in his ownership of the company. Lenny now holds 229,340 units valued at around $3.3 million.
The timing matters. CAG’s latest drop began on April 9 when BNP Paribas downgraded the stock to Neutral from Outperform and slashed its price target to $16 from $19. The stock closed below $16 that same day.
Things got harder from there. On April 13, Conagra named John Brase as its next CEO and president. Jefferies flagged that Brase would be walking into “high leverage, ongoing inflationary pressures, and margin compression.”
Earlier this month, Conagra reported fiscal Q3 results that came in below expectations. The company posted EPS of $0.39, missing the $0.40 consensus by a penny. Revenue came in at $2.79 billion, slightly ahead of the $2.76 billion estimate.
But the top-line beat didn’t soften the blow. Revenue was down 1.9% year-over-year, and the company earned $0.51 EPS in the same quarter a year ago — a sharp drop. Conagra also cut its full fiscal year outlook, pointing to the macroeconomic environment and persistent inflation.
The stock is now down 17% year-to-date. The S&P 500 is up 4.2% over the same period.
Wall Street isn’t rushing to upgrade the stock. On Thursday, Morgan Stanley cut its price target on CAG to $15 from $17, while keeping an “equal weight” rating. That implies just 3.6% upside from Wednesday’s close.
Morgan Stanley wasn’t alone. JPMorgan cut its target from $19 to $17 in March. TD Cowen and Deutsche Bank both moved to $14. Stifel cut to $15 this week.
MarketBeat’s current analyst breakdown shows 1 Buy, 13 Hold, and 4 Sell ratings, with an average target of $15.80 and an overall rating of “Reduce.”
CAG opened Thursday at $14.49. Its 50-day moving average is $16.75 and the 200-day sits at $17.38, both well above the current price.
One data point that stands out: CAG currently yields around 9%, the highest dividend yield in the S&P 500. The average yield for a dividend payer in the index is 2.3%.
Institutional investors own 83.75% of the stock. Several smaller funds increased their positions in recent quarters, though the moves were modest in size.
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