Categories Analysis, Consumer

Conagra Brands (CAG) likely to report lower sales and profit for Q3 2024

The company is scheduled to report third-quarter results on April 4, before the opening bell

Consumer staples companies are among the worst affected by inflation and macro uncertainties, and Conagra Brands, Inc. (NYSE: CAG) is no exception. After a relatively weak first half, the packaged food company is making targeted investments in the business to build momentum, taking a cue from improvements in volume trends in its domestic retail business.  

Investing in CAG

Shares of the Chicago-headquartered company, which owns iconic brands like Birds Eye and Healthy Choice, have been trading sideways after slipping to a two-and-half-year low in September last year. The stock experienced an upswing in the past few weeks and it is trading broadly in line with the 52-week average. While the stock’s near-term prospects look weak, it should benefit from the strength of the brand in the long term – the company has a good track record of sustained growth and delivering value to customers. Being a high-yield dividend stock, CAG has been a favorite among income investors.

The continuing softness in consumer demand, especially for the frozen and refrigerated categories, remains a concern as far as returning to high growth is concerned. Margins might come under pressure from increased spending on promotional activities to boost the top line. The strategy of passing on higher input costs to customers can offset the benefits of the recovery in volumes. At the same time, consumers have become more price-conscious and tend to spend less on expensive items.

Conagra’s CEO Sean Connolly said at the Q2 earnings call: “As we look ahead to the second half, we have a robust investment plan in place, reflecting our increased confidence in consumer responsiveness to brand building levers. Our goal is to continue to build momentum with our consumers as we move through the back half of the fiscal year, and then enter fiscal ’25 in a position of strength. I will share more on our multifaceted action plan in a few minutes. Finally, we are updating our guidance for fiscal ’24, reflecting both the consumer environment and the additional brand investments in the second half of the year.”

Q3 Report on Tap

When Conagra Brands reports third-quarter results on Thursday, April 4, 2024, Wall Street will look for adjusted earnings of $0.64 per share. In the year-ago quarter, the company had earned $0.76 per share, excluding special items. The consensus revenue estimate for the February quarter is $3.01 billion. Quarterly earnings exceeded estimates regularly for over a year. In the second quarter, earnings declined 12% annually to $0.71 per share.

The bottom-line performance was negatively impacted by a 3% decrease in net sales to $3.21 billion, broadly in line with analysts’ estimates. The core business divisions, Grocery & Snacks and Refrigerated & Frozen, witnessed a decrease in sales. The management’s cautious full-year guidance – projecting a decrease in organic sales and lower adjusted earnings – indicates a flat second half.

On Thursday, CAG opened slightly below $30 and traded higher during the session. After several highs a lows, the stock has now returned to where it was at the beginning of the year.

Listen to the conference calls as they happen. Don't miss a beat! With AlphaStreet Intelligence, you can listen to live calls and interviews as they happen, so you never have to worry about missing out on important information.

Most Popular

PG Earnings: Procter & Gamble Q3 profit climbs, beats estimates

Consumer goods behemoth The Procter & Gamble Company (NYSE: PG) announced financial results for the third quarter of 2024, reporting a double-digit growth in net profit. Sales rose modestly. Core

AXP Earnings: All you need to know about American Express’ Q1 2024 earnings results

American Express Company (NYSE: AXP) reported its first quarter 2024 earnings results today. Consolidated total revenues, net of interest expense, increased 11% year-over-year to $15.8 billion, driven mainly by higher

Netflix (NFLX) Q1 2024 profit tops expectations; adds 9.3Mln subscribers

Streaming giant Netflix, Inc. (NASDAQ: NFLX) Thursday reported a sharp increase in net profit for the first quarter of 2024. Revenues were up 15% year-over-year. Both numbers exceeded Wall Street's

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top