Conagra Brands: Time To Cut The Dividend And Pay Down Debt
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David Desjardins2.7K FollowersFollow5ShareSavePlay(16min)CommentsSummaryConagra is currently caught in a share price drawdown of ~65%, now exceeding in severity the declines recorded during the implosion of the tech bubble and the 2008 financial crisis.Now that market expectations have been revised lower multiple times, Conagra now trades at ~8.7x forward earnings, one of the lowest valuation multiples in the company's history.With organic net sales growth of +2.4% during Q3-26, CAG reported some of the strongest top-line growth numbers in the packaged food industry.The core challenge facing the company relates to input cost inflation, and hence to margins. More precisely, adjusted operating margin declined from 16.9% in Q3-23 to 10.6% in Q3-26.With the arrival of a new CEO in June, I would not be surprised if the company announces a meaningful dividend cut to strengthen the balance sheet and pay down debt.Packaged Food In Unloved Territory jetcityimage/iStock Editorial via Getty Images After researching Kraft Heinz (KHC) and General Mills (GIS) last month, I am now turning my attention to Conagra Brands (CAG), another packaged food company that has been underThis article was written byDavid Desjardins2.7K FollowersFollowFor almost a decade, I held research analyst positions in various investment firms, mostly in Toronto. I started in sell-side research with a Canadian bank, then moved to a hedge fund, followed by a family office and then finished my career in wealth management. I was 20 on my first day on Bay Street. I will forever remember. I had worked so hard to get there, from a small French-speaking town in Québec. Getting my CFA and CAIA designations by 25 was another important milestone. I was a young man with a dream, wanting to make it big. However, life was about to teach me a painful lesson. Before conquering the world, a man must first conquer himself by going into the depths of his own abyss. Only then may he shed his naivety and become a man truly able to love.For the last four years, I have been living in a yurt in the boreal forest, approximately 100 kilometres away from the closest paved road or grocery store. In a forest full of birds, just beside a lake full of fish. For water, I go to the creek. For heat, there is plenty of white birch and quaking aspen around. If I need anything in town, I have plenty of money for my needs. I am now 30, in love, and as free as the birds in the skies, so what else can I ask for? In all humility, and in all gratitude, I say thank you to this grandiose symphony we call life.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CAG over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.