ConAgra Foods (CAG), one of the US largest packaged food companies, issued mixed financials for its fiscal 2017 first quarter ended August 28. Revenues decreased 4.6% y-o-y to $2.67 bn and missed consensus estimate of $2.74. The decline was due to the company’s actions to build a higher quality revenue base, partially offset by Lamb Weston’s continued growth and increased price/mix. Divestitures and the impact of foreign exchange reduced sales by approximately 2 percentage points. At the same time ConAgra’s cost of goods sold decreased 7.2%, while selling, general and administrative (SG&A) expenses plummeted 30.6%. As a result, adjusted operating profit jumped 22.8% to $468.9 mn, and operating margin expanded 390 basis points to 17.6%. Adjusted earnings per share surged 48.8% to 61 cents comfortably beating analysts’ average projection of 48 cents.ConAgra exited FQ1 with cash and cash equivalents of $794.6 mn and senior long-term debt (excluding current portion) of $4.26 bn. In the reported quarter, the company generated net cash worth $325.9 mn from operating activities, up from $93.1 mn in the year-ago quarter. Capital spent on additions of property, plant and equipment totaled $117.4 mn. During FQ1, ConAgra also repaid approximately $550 mn of debt, paid dividends worth $110 mn and repurchased approximately 1.8 mn shares for $86 mn. My outlook for ConAgra remains positive. The company is currently undergoing rigorous structural changes by divesting its less profitable businesses and acquiring new brands, for boosting its revenues and margins. ConAgra claimed that by the end of fiscal 2017, it would successfully spin off its Lamb Weston business, which would result in the formation of two separate pure play public companies – ConAgra Brands and Lamb Weston. The decision reflects the company’s focus on greater commercial flexibility and intention to boost near-term profits.Solid earnings beat allowed shares of ConAgra to surpass $45 resistance level as well as 50-day moving average. I expect the stock to continue to rise, with medium-tern target at $52. $CAG, ConAgra Brands, Inc. / 1440