Cutting its outlook last month allowed ConAgra (CAG) earnings to beat Wall Street’s profit estimate in the most recent quarter, but CAG stock will likely continued to be weighed down by the after-effects of the Great Recession.

CAG stock got a bit of a bump Thursday morning from a better-than-expected ConAgra earnings report — although sales still missed estimates — but it still has a long way to go to get out of the red.

Indeed, CAG stock has been disappointing for quite some time. CAG stock is down 11% for the year-to-date, which is bad enough. Over the last 52 weeks? CAG stock is off 15%. That lags the broader market by 35 percentage points.

True, this dividend stock sports an attractive yield of 3.4%, but the declining price of CAG stock still makes it a loser: the total return come to -10% for the year so far.

The problems afflicting CAG stock are similar to those hurting McDonald’s (MCD). For some companies, the recession never really ended. Joblessness, stagnant wage growth and a general feeling of insecurity have lower- and middle-income consumers maintaining tight budgets. As ConAgra earnings show, that hurts sales of ConAgra’s higher-margin name brands like Chef Boyardee and Hunt’s ketchup.

As a result, ConAgra has been forced to cut prices in order to compete with other name brands, as well as private-label offerings, which in turn squeezes margins. That, in turn, weighs on CAG stock.

In a move to take advantage of the popularity of cheaper store brands, last year ConAgra  acquired Ralcorp for $5 billion, making it the largest producer of private-label food in the U.S. So far the strategy hasn’t helped. Indeed, a failure to reach profitability targets in the Ralcorp division contributed to the company cutting its ConAgra earnings forecast last month.

ConAgra says it is still sorting out customer service issues and problems of pricing and sales force coverage stemming from a restructuring Ralcorp underwent before ConAgra took over.

The bottom line is that Ralcorp isn’t performing as expected yet, and the consumer foods business, which includes brands such as Peter Pan peanut butter and Slim Jim, is suffering from lower volumes.

CAG Stock Reflects Volume, Margin Weakness

Add it all up, and the weak performance in CAG  stock reflects the case that ConAgra earnings show revenue weakness in the higher-margin brands division and profitability shortfalls in private label.

Total revenue increased 15% to $4.39 billion — short of analysts’ average forecast — but the higher-margin consumer brands business only acted as a drag. Indeed, according to ConAgra earnings, that division posted a 3% decline in volume — led by Healthy Choice, Orville Redenbacher’s and Chef Boyardee — and a sales decrease of 3.5% to $1.87 billion.

At Ralcorp, ConAgra has managed to protect volumes, but only by cutting prices, which hurts margins.

ConAgra earnings last quarter came to 62 cents a share on an adjusted basis — beating the Street by 2 cents — but margins shrunk by half a percentage point, which is a lot in this close-to-the-bone business.

Although the latest ConAgra earnings report exceeded analysts’ average estimate, it only did so because the company slashed guidance last month. Pricing pressures and volume weakness show no signs of letting up, and it’s not clear what ConAgra can do about it. That will continue to hobble CAG stock.

After all, the economic factors contributing to those woes are beyond its control. A large swath of lower- and middle-income consumers need to feel a lot better about their finances before they’ll splurge again on ConAgra’s big-name brands.

And there’s little else to get excited about in CAG stock. It trades essentially in line with its own five-year average on both a forward and trailing earnings basis. In other words, CAG stock doesn’t exactly scream bargain at these levels. And even if CAG stock has found a floor, it looks to be a while before it can make any headway from here.

That has CAG stock looking a lot like a “hold.” There’s nothing compelling enough to make it worth initiating a position at these prices, and nothing so terribly wrong and unfixable to justify dumping it now either.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.