In early trading on Tuesday, the Dow Jones industrials were down 0.01%, but the S&P 500 was up 0.07% and the Nasdaq up 0.03%. That is about as flat as it gets.
There is only a short list of earnings reports due out this week, partly due to a four-day week and partly due to the usual breather following the end of a quarter. U.S. markets are closed Friday to observe Good Friday.
Three companies, all in the consumer staples sector, are set to report quarterly results on Wednesday.
Conagra
Over the past 12 months, the share price of packaged food giant Conagra Brands Inc. (NYSE: CAG) has increased by about 9.9%. For the year to date, however, the stock is down 3.3%. About 84% of the company’s stock is owned by institutional investors who like its solid dividend. Conagra posted negative free cash flow in the prior quarter, typically its worst, but has total free cash flow of $817.7 million over the past four quarters. The company will report quarterly earnings before markets open on Wednesday.
Of 16 analysts following the stock, 10 have a Hold rating and another six rate it at Buy or Strong Buy. At a recent price of around $37.40 a share, the upside potential based on a median price target of $41.00 is 9.6%. At the high price target of $48.00, the upside potential is 28.3%.
The consensus estimate for fiscal 2023 third-quarter revenue is $3.08 billion, which would be down 7.0% sequentially but up by 5.8% year over year. Adjusted earnings per share (EPS) are expected to come in at $0.64, down 21.7% sequentially and up 10.3% year over year. The current estimates for the fiscal year that ends in May call for EPS of $2.68, up 13.5%, on sales of $12.36 billion, up 7.1%.
Conagra stock trades at 14.0 times expected 2023 EPS, 13.3 times estimated 2024 earnings of $2.81 and 12.6 times estimated 2025 earnings of $2.96 per share. Conagra’s 52-week trading range is $31.02 to $41.30. The company pays an annual dividend of $1.32 (yield of 3.53%). Total shareholder return over the past 12 months is nearly 14%.
24/7 Wall St.Constellation Brands
Constellation Brands Inc. (NYSE: STZ) produces, imports and sells beer, wine and spirits in the United States and other countries. With a market cap of around $42.8 billion, it is the country’s largest publicly traded alcoholic beverage stock. The shares have dropped about 3.6% of their value over the past 12 months, including a decline of 2.7% since the beginning of the year. Constellation reports results after markets close Wednesday.
Last week, Constellation Brands announced a partnership with media company Tastemade to develop and produce a series for Tastemade’s streaming channel called “Street Somm” (that’s a pronounceable and spellable version of “sommelier”).
Of 27 analysts covering the stock, 20 have a Buy or Strong Buy rating and the others have Hold ratings. At a share price of around $225.40, the upside potential based on a median price target of $264.50 is 17.3%. At the high price target of $295.00, the upside potential rises to 30.9%.
Analysts expect Constellation to report fiscal 2023 fourth-quarter revenue of $2.02 billion, down 17.3% sequentially and 3.8% lower year over year. Adjusted EPS are pegged at $1.84, down 35.0% sequentially and by 22.4% year over year. For the full fiscal year that ended in February, estimates call for EPS of $10.70, up by 4.9%, and revenue of $9.48 billion, up 7.4%.
Constellation stock trades at 21.1 times expected 2023 EPS, 19.1 times estimated 2024 earnings of $11.80 and 16.9 times estimated 2025 earnings of $13.30 per share. The stock’s 52-week range is $208.12 to $261.52. Constellation pays an annual dividend of $3.20 (yield of 1.42%). Total shareholder return for the past 12 months is negative 2.24%.
Lamb Weston
Lamb Weston Holdings Inc. (NYSE: LW) is the nation’s largest producer and marketer of frozen potato products and the ninth-largest packaged food company of any kind. Lamb Weston stock is up 69% over the past 12 months. Lamb Weston reports earnings after markets close on Wednesday.
In February, the company acquired the 50% of a joint venture that it did not already own from Netherlands-based Meijer Frozen Foods for €525 million (about $572.5 million) and 1.95 million shares of Lamb Weston stock. The deal added production facilities to supply some 2 billion pounds of frozen products annually.
Of seven analysts covering the stock, five have a Buy or Strong Buy rating and one has a Hold rating. At a share price of around $104.20, the upside potential based on a median price target of $110.00 is 5.6%. At the high price target of $115.00, the upside potential rises to nearly 10.4%.
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