With Ralcorp Acquisition Complete, ConAgra Profit Rises on Meatier Revenues

OMAHA, Neb.The $6.8 billion acquisition of Ralcorp Holdings boosted second-quarter Commercial Foods and Private brands sales at ConAgra Foods, Inc. as the company with such marquee brands as Swiss Miss, Hunt's and Marie Callender's beat earnings expectations.

ConAgra's quarterly profit rose 17.5% to $248.7 million from $211.6 million in the previous year. Earnings per share (EPS) increased 13.7% to 58 cents from 51 cents.   

ConAgra CEO Gary Rodkin on Thursday said EPS beat expectations.

According to The Wall Street Journal, revenue ($4.71 billion) rose 26%, exceeding analysts' forecasts for $4.63 billion.

ConAgra said sales in the Consumer Foods segment ($2 billion) were basically flat, but the unit's operating profit rose 13% to $289 million.

Sales in the Commercial Foods segment edged up 3% to $1.6 billion, benefiting from $79 million thanks to the Ralcorp purchase. However, operating profit ($169 million) fell 13%. ConAgra indicated the plunge was expected because Lamb Weston potato products suffered from a customer's decision to not renew a large amount of the potato business toward the end of the last fiscal year.

In the Private Brands segment, sales rose to $1.1 billion from $900 million. ConAgra attributed the growth to the Ralcorp acquisition.

Adjusting for certain items, ConAgra forecasts 2014 fiscal year EPS of $2.34-$2.38. Rodkin said the guidance reflects the company's cautious approach about the near term given challenging conditions in the industry.

It's been a decent year for ConAgra shareholders. Shares of ConAgra (NYSE: CAG) have risen 14% this year, according to Barron's, and closed today at $33.54. According to Zacks Investment Research, 7 analysts have a hold on the stock while 4 rate it a strong buy and 1 analyst has a buy rating.  

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