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CHICAGO - Conagra Brands, Inc. (NYSE: CAG) has finalized the sale of its Chef Boyardee brand to Hometown Food Company, a firm under the Brynwood Partners portfolio, as announced today. The deal encompasses the transfer of the Milton, Pa. manufacturing facility along with the related assets and operations of the Chef Boyardee shelf-stable product line. However, Conagra will retain the licensing rights for the brand’s frozen skillet meals, which Hometown Food Company will produce. The transaction comes as Conagra’s stock trades near its 52-week low of $21.98, with InvestingPro analysis suggesting the company is currently undervalued.
Conagra Brands, a prominent name in the North American branded food industry with a market capitalization of $10.86 billion, is known for an array of popular brands such as Birds Eye, Duncan Hines, and Healthy Choice, among others. With a century-long history of producing quality food, the company focuses on innovation and meeting the dynamic preferences of consumers. Conagra’s commitment to corporate responsibility is evident in its efforts to make decisions that benefit its business, employees, communities, and the planet. The company, with headquarters in Chicago, reported net sales of $11.7 billion in the last twelve months. Notably, InvestingPro data shows the company has maintained dividend payments for 50 consecutive years, currently offering an attractive 6.15% dividend yield.
The divestiture of Chef Boyardee is part of Conagra’s ongoing strategy to refine its product portfolio and focus on areas with higher growth potential. This transaction allows Hometown Food Company to expand its product offerings and leverage the longstanding heritage of the Chef Boyardee brand. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ top stocks, Conagra’s net income is expected to grow this year, suggesting potential benefits from this strategic portfolio refinement.
Investors and market observers may see this move as an opportunity for Conagra to streamline its operations and concentrate on brands that align more closely with consumer trends. Meanwhile, Hometown Food Company can potentially enhance the value of the Chef Boyardee brand through dedicated attention and resources.
This news is based on a press release statement and provides a factual summary of the transaction between Conagra Brands and Hometown Food Company without speculation or promotional commentary.
In other recent news, Conagra Brands, Inc. reported a shortfall in both revenue and earnings, with revenue reaching $2.841 billion, falling 2.0% below consensus estimates. The company’s organic sales growth declined by 5.2% year-over-year, and earnings per share came in at $0.51, which was 2 cents below expectations. In a strategic move, Conagra has agreed to sell its Chef Boyardee brand to Hometown Food Company for $600 million, a transaction expected to finalize in the first quarter of Conagra’s fiscal year 2026. This sale aligns with Conagra’s strategy to focus on areas with better long-term growth potential and is anticipated to be approximately 4% dilutive to its adjusted earnings per share for fiscal year 2025.
Additionally, Conagra has secured a $200 million term loan and extended its existing $300 million loan with Bank of America to enhance its financial flexibility. Analyst firm Citi has adjusted its outlook on Conagra, lowering the price target from $27.00 to $25.00, while maintaining a Neutral rating due to a more conservative earnings outlook. The sale of Chef Boyardee is expected to have a 4% dilutive effect on earnings per share, with proceeds intended for debt reduction. Meanwhile, Bernstein analysts maintained their Market Perform rating on Conagra, keeping a steady price target of $28.00 despite recent financial underperformance. These developments reflect Conagra’s ongoing efforts to optimize its portfolio and financial structure amidst challenging market conditions.
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