ConAgra Rolls as Market Rallies — Tuesday’s IP Market Recap

by Kyle Woodley | December 20, 2011 4:27 pm

[1]There’s nothing sexy about packaged-food companies, but try telling ConAgra (NYSE:CAG[2]) investors not to be a little excited after Tuesday’s earnings “faceoff” with rival General Mills (NYSE:GIS[3]).

ConAgra jumped 4% on Tuesday after beating Wall Street expectations for its fiscal second quarter. ConAgra reported a net income decline of 15% from the year-ago period. However, earnings of 47 cents per share, excluding one-time items, still were four cents higher than anticipated.

ConAgra saw a sales increase of 16% in its commercial foods segment, mostly on the strength of price hikes, and it also maintained current guidance for the fiscal year, with growth still expected in the low- to mid-single digits.

General Mills’ report wasn’t nearly as positive — net income fell 27%, with adjusted earnings of 76 cents per share coming in under Thomson Reuters I/B/E/S forecasts calling for 79 cents. CEO Don Mulligan said the acquisition of Yoplait took a toll on gross margins. The company did maintain guidance at EPS of $2.59 to $2.61. GIS shares dipped less than 1% on the news.

General Mills was in a minority of declining stocks Tuesday, as a better-than-expected report on U.S. housing starts sparked the markets to life, sending the Dow Jones up more than 335 points in a pre-Christmas rally that especially shone on the banking and tech sectors. Big winners included Dish Network (NASDAQ:DISH[4], +9.23%) and Juniper Networks (NASDAQ:JNPR[5], +8.94%) as well as ING (NYSE:ING[6], +8.51%) and Deutsche Bank (NYSE:DB[7], +7.96%).

CVS Caremark (NYSE:CVS[8]) rode both market positivity and upbeat expectations for 2012 to a nearly 9% climb Tuesday. CVS said its pharmacy benefits management business would end a two-year period of consecutive declines, and it updated its forecast for 2012 adjusted earnings per share to $3.15-$3.25, up 13% to 16% over last year. CVS also said it would boost its dividend by 30%, from 12.5 cents to 16.25 cents.

Also Tuesday, Japan announced it would buy 42 F-35 jets from American defense contractor Lockheed Martin (NYSE:LMT[9]), which beat out Boeing (NYSE:BA[10]) and a joint venture of EADS, Alenia Aeronautica and BAE Systems. News of the $7 billion deal sent LMT shares up more than 2% by Tuesday’s close.

Three Up

• Sprint (NYSE:S[11]): Up 9.26% (20 cents) to $2.36.
• Halliburton (NYSE:HAL[12]): Up 7.82% ($2.41) to $33.21.
• Micron Technology (NASDAQ:MU[13]): Up 6.7% (36 cents) to $5.81.

Three Down

• Targacept (NASDAQ:TRGT[14]): Down 35.86% ($2.79) to $4.99.
• Red Hat (NYSE:RHT[15]): Down 8.9% ($4.10) to $41.95.
• Research In Motion (NASDAQ:RIMM[16]): Down 2.87% (37 cents) to $12.52.

As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Check out our list of previous IP Market Recaps[17].

Source URL: https://investorplace.com/2011/12/conagra-cag-general-mills-gis-cvs-lockheed-martin/

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