ConAgra Foods, one of the US largest packaged food companies, issued solid financials for its fiscal 2016 third quarter ended Feb 28. Revenues increased 0.6% y-o-y to $2.92 bn and surpassed consensus estimate of $2.87 bn. On a segmental basis, Consumer Foods revenues dipped 2.4% to $1.85 bn primarily due to the unfavorable impact of foreign currency translation and weaker segmental volumes. At the same time, revenues from the Commercial Foods segment jumped 6.1% to $1.07 bn driven by higher sales at the Lamb Weston potato business. Operating income grew 13.6% to $466.3 mn supported by cost-reduction measures and improving price/mix, and operating margin expanded 180 basis points to 15.9%. Adjusted earnings per shares rose 15.3% to 68 cents and were in line with analysts’ average projection. The company anticipates full fiscal year 2016 adjusted earnings within the range of $2.05-2.07 per share. In FQ3, ConAgra generated net cash worth $695.1 mn from operating activities, while capital spent on additions of property, plant and equipment totaled $279.7 mn. A quarterly dividend was 25 cents per share, which offers a healthy annualized dividend yield of 2.2%. In February, ConAgra concluded the sale of its loss-making private label segment to TreeHouse Foods. The company claimed to have generated in excess of $2.6 bn in free cash through the deal, and these proceeds, in turn, have been deployed to lower its debt burden by $2.15 bn and would finance its future capital allocation programs. Shares of ConAgra are trading above the $45 support level and, in my opinion, are well positioned to reach the $50 mark in near term. $CAG, ConAgra Brands, Inc. / 1440