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Strategies & Market Trends : Value Investing
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To: Grommit who wrote (43910)9/20/2011 11:36:28 AM
From: E_K_S  Read Replies (2) of 78764
 
ConAgra Foods, Inc. (CAG)

Hi Grommit -

I am trying to figure out CAG and what they need to add (via acquisition) to get those profits going again.

ConAgra 1Q profit falls on higher costs
ConAgra Foods 1Q profit falls 42 percent, pressured by higher costs in consumer foods division
finance.yahoo.com

From the article:"...ConAgra and other food companies have had to raise prices as higher costs for ingredients and other raw materials cut into profits. The Omaha, Neb. company's announcement that it plans more price hikes is not entirely unexpected, as higher costs for ingredients, packaging and fuel are expected to continue to be a challenge for the remainder of the year and possibly further....".

The company withdrew its $5.17 billion takeover bid for maker Ralcorp Holdings Inc. on Monday. I wonder if they can buy a company that can help them "fix" their raw material costs. Perhaps this is what they were trying to accomplish through a private label division since there would be a little more flexibility in their margin structure to absorb higher raw material costs.

I held off buying more shares this AM as the stock sold off on this dismal earnings report. If it was obvious how they can squeeze out more revenues from higher raw material costs then this one might be a buy. They have the capital to "buy" a solution. The company is limited on how much they can raise end user prices.

EKS
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