Conagra and Kimberly-Clark stocks tumble amid rising costs and shifting consumer habits
Two major consumer staples companies, Conagra Brands and Kimberly-Clark, have faced steep stock declines over the past three years. Both firms now trade at significantly lower prices, making them potential bargains for investors. Their struggles stem from inflation pressures, shifting consumer habits, and rising costs across their industries.
Conagra Brands has seen its stock price fall by half since 2023, now hovering around $19 per share. The decline follows weakening demand for packaged foods as high inflation squeezed household budgets. Rising input costs for grains and labor, combined with aggressive price hikes, led to volume losses and market share slipping to cheaper private-label brands. Despite these challenges, the company maintains a 7.3% dividend yield—the highest in the S&P 500—with a payout ratio nearing 80%. For the current fiscal year, Conagra forecasts flat organic sales and adjusted earnings between $1.70 and $1.85 per share.
Kimberly-Clark's stock has dropped by about 25% over the same period, currently trading at roughly $110 per share. The company has struggled with slower growth in personal care products like diapers and tissues, as post-pandemic demand normalised. Elevated costs for pulp and energy, along with competition from premium brands such as Procter & Gamble, further weighed on performance. To counter these pressures, Kimberly-Clark recently announced a $48.7 billion deal to acquire Kenvue, aiming for $2.5 billion in cost savings within two years. The company also extended its dividend increase streak to 54 years, securing its status as a Dividend King.
Both firms now offer lower valuations and higher dividend yields compared to the broader market. Their stocks have underperformed the S&P 500 by 30–40%, reflecting the broader challenges in the consumer staples sector.
The sharp declines in Conagra Brands and Kimberly-Clark stocks have positioned them as potential bargains for investors. With dividend yields above average and plans to cut costs or stabilise earnings, the companies may attract those looking for value in a volatile market. Their performance will depend on how well they manage ongoing inflation and shifting consumer preferences.
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