Despite Huge Charge, ConAgra Foods Inc (NYSE:CAG) Profits Top Expectations

ConAgra Foods Inc (NYSE:CAG) moved to a loss in its 3Q2015 due to a huge impairment charge of $2.82 per share. The Omaha-based company lost $954.1 million or $2.23 per share in 3Q2015compared to a profit of $234.3 million, or 55 cents per share a year ago. The loss was due to non-cash impairment charge of $1.3 billion on write down of its goodwill and other intangible assets in the Private Brands division.

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The adjusted diluted earnings however exceeded everyone’s expectation and the earning per share of the food processor, and packaging company came at $0.59 per share on revenue of $3.35 billion. This compared to an EPS of $0.62 on revenue of $3.87 billion a year ago. The adjusted diluted earnings of the company beat expectations and the markets responded, with shares of ConAgra trading up about 1.8% in Thursday premarket, at $35.5 in a 52 week range $28.60 to $37.46.

Thompson Reuters had predicted a price target around $34.80 per share before results of 3Q2015 were announced; hence the shares outperformed expectations of the analysts. The company also increased its diluted EPS for fiscal year to $2.19 while the analysts have pegged the same at $2.14 per share.

The ConAgra Foods Inc (NYSE:CAG) CEO, Gary Rodkin, in his statement expressed his pleasure at the performance of the Consumer Foods segment and the domestic Commercial Foods business of the company. He remains hopeful about the Food sector of the company but showed concerns about the Private Brands segment.

The company must put the bad news from its Private Brand divisions behind it and look forward to a better performance in the fourth quarter. The rising commodity prices are set to affect the market, and ConAgra has begun raising prices of commodities like durum wheat and snack nuts. However, continued drought in California will affect the prices of many commodities like almonds and walnuts. It is to be seen whether the Company will be able to pass on the rising prices fast enough to ensure profitability of its Private Brands arm.

About the Author

Adam is a staff reporter for US Markets Daily Publications & Media, covering foreign affairs and domestic policy.

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