ConAgra Foods, Inc
The company needs to raise their net income.
One good point is that they reduced the time
they have inventory on hand.
They are slowly improving there Debt to Equity
With their future plans and good outlook I feel
that they are on the right track to improving there
company and its numbers.
2005 Annual Report
Bruce Rhode, Chairman and Executive Officer
Home Office: One ConAgra Drive
Omaha, NE 68102-5001
The ending date of the last fiscal year was May 29, 2005.
ConAgra has three segments: Retail, Foodservice, and Food
Ingredients. Some of the company’s products include: Processed
prepared meats, condiments, cooking products, frozen entrees and side
dishes, and cooking ingredients.
ConAgra is a global company but its main distribution is in the United
Deloitte and Touch LLP
The statements are accurate in stating the position
of the company. Also, they changed its method
of accounting for variable interest entities and
asset retirement obligations in 2004. It also
changed its methods of accounting for goodwill
and other intangible assets in 2003.
Stock Market Information
Stock Price : 20.99
Twelve month trading range: $28.39-19.99
Dividend per share : .2725
March 2, 2006
I would recommend holding because the
success is increasing so the stock price will
probably go down.
Industry Situation and Company
ConAgra is a company that has a wide variety of brands and
offers a wide variety of foods. From reading about the company they
seem to care about your family. They offer easy, quick, but healthy
foods. The company focuses on long-term growth. They seem to stress
that they want to improve relations between their company and its
customers. Also, making processes more productive and streamlining the
supply chain. (P. 4, Annual Report) They also want to make healthier
foods for families. (P. 18, Annual Report)
ConAgra uses a Multi-Step income statement.
Financial Highlights Page 5
There was not a large amount of increases or
decreases. However, the decreases they did have
was that they went down 2,000 employees, the
diluted earnings per share of discontinued operations
went down .14, and net income went down $120.
Balance Sheet Page 56 Page 56
The Cash, Other Assets, Notes Payable, and
Current Liabilities of discontinued Operations
all decreased. Accumulated other
Comprehensive Income increased. The
Current Installment on Long Term Debt
changed the most. It decreased about $270.
Statement of Cash Flows
The cash flows are down about $100 or so from
the past two years.
The company is not really growing through
investing activities. However, they did buy
some furniture and office equipment.
ConAgra’s primary source of financing is through
Cash has decreased over the past two years.
Cash and Cash Equivalents:
All highly liquid investments with a maturity of three months or less at the
date of acquisition, including short-term time deposits, government agency
and corporate obligations, are classified as cash and cash equivalents.
The company primarily uses the lower of cost (determined using the first-in,
first-out method) or market for valuing inventories not hedged. Grain, flour
and major feed ingredient inventories are hedged to the extent practicable and
are primarily stated at market, in including adjustment to market of open
contracts for purchases and sales.
Property, Plant, and Equipment:
Carried at cost. Depreciation is calculated using primarily the straight-line
method over the estimated useful lives.
Working Capital: 2005: 2135.1 2004: 2144.8
The working capital did not change.
Current Ratio: 2005: 1.89 2004: 1.80
Although the ratio could stand to be higher, it is a decent number to have.
Receivable Turnover: 2005: 11.23 2004: 13.62 times
11.23 is not a bad number to have, but compared to last year’s it is a little
on the low side.
Average days’ sales uncollected: 2005: 32.50 2004: 26.8
32.54 days to collect an account may not sound like a lot but
compared to last year, the days increasing by 6 is not a good thing.
Inventory Turnover: 2005: 4.47 2004: 2.18
Whatever the company did to make their turnover double, they need to
keep the trend going.
Average Days’ Inventory on hand: 2005: 81.6 2004: 167.43
These numbers reflect the turnover rate and it is very impressive that they
cut the days in half.
Profit margin: 2005: 4.4% 2004: 5.7%
For every dollar of net sales in 2005, the company made $.04. Even
though they only decreased by 1 percent. That difference can decide if
that year was a profitable year or a fair one.
Asset turnover: 2005: 1.08 2004: .96
The company used their assets more efficiently this year than last.
Return on assets: 2005: 4.8% 2004: 5.5%
The assets did not produce as much net income as did last year.
Return on equity: 2005: 6.65% 2004: 17.1%
This drop on ROE most likely does not look too good to the investors.
Debt to equity: 2005: 1.65
In 2004, the ratio was very high. The company’s creditors controlled it.
In 2005, even though the ratio is still high, they did make an improvement.
Hopefully it is the beginning of a trend.
Market Strength Ratios
Price/Earnings per share: 2005: 16.2 times
2004: 18.5 times
That is relatively low. The investors are not paying very
much compared to earnings.
Dividend yield: 2005: 1.3% 2004: 1.2%
The investors should be happy because the amount of
dividends has been rather constant over the past two