Initiating with Strong Buy, $35 PT. Conagra Brands, Inc. manufactures and markets a portfolio of branded packaged foods sold to retail outlets in North America. As part of the consumer staples facade, structural dislocations have created a fundamental disconnect between the defensible cash flow profile and the shortsighted focus of the market on cost and volume headwinds. With the Street anchored to optimistic consensus into the FY26, we tie our valuation to a more rigorous framework where our modeled $1.85 FY26 EPS (-18% Street) is locked in as baseline estimates for FY26 decline under multiple risk factors (supply chain drag = leverage, 4% inflation, 50 bps tariff risk). Securing a 4% COGS productivity program and incremental contribution from 53-week in FY26, we maintain valuation discipline with volume declines solid in Q3 (-5.2% Y/Y) and FY25 guidance for negative organic sales growth. P/E 31.4x is untenable with leverage elevated (3.6x EBITDA), supply chain risk, and dividend policy consuming the majority of FCF. Our 19.0x target P/E factors in Conagra's cash yield defensiveness with sub-peer growth, underpinning $35 valuation compared to margin segmentation and drift toward recovery. Tariff/T&A escalation or inflation stickiness can hinder margin recapture if cost discipline slips further, but risk/reward at current price (93rd historical percentile) puts us in the contrarian camp for sizable upside to I/B/E/S consensus and re-rating with sentiment shift. When sentiment bends to operating reality, the gap between price and value will narrow.
Brand share resilience
We see CAG at an inflection point for productivity and cost discipline, with the street meaningfully