Conagra Brands’ (NYSE: CAG) first quarter 2020 earnings beat Street’s estimates, while sales failed to meet the consensus targets. Conagra reported adjusted EPS of $0.43 on sales of $2.39 billion for the first quarter. Analysts had projected the branded food company to post earnings of $0.39 per share on sales of $2.48 billion. The company also retained its FY20 outlook.
Conagra stock, which closed up 1.15% at $29.90 yesterday, advanced about 3% in the pre-market trading session.
For the first quarter of 2020, GAAP EPS from continuing operations totaled $0.36. Sales grew 30% in the quarter, mainly due to the acquisition of Pinnacle. Orgranic sales decreased 17%.
The Chicago-based firm reaffirmed the earlier guided outlook for FY20. Conagra expects adjusted EPS to be in the range of $2.08 to $2.18, reported net sales to grow between 13.5% and 14.0% and organic net sales growth of 1.0% to 1.5% for the fiscal year 2020.
The company expects stronger organic net sales growth and adjusted EPS growth in the back half of fiscal 2020 than the first half due to the timing of the impact of new innovation, strong first-half brand-building investments that peak in the second quarter, the planned pace of synergy capture, and the lapping of both higher interest expense and share count.
Earlier in September, Conagra announced its plans to divest its Direct Store Delivery (DSD) snacks business to Utz Quality Foods, in an undisclosed deal, which is targeted to close before the end of calendar year. Following the closing, the company expects this deal to reduce sales by about $110 millon and adjusted EPS by 2 cents annually.
“While our Foodservice and International businesses experienced unplanned softness on the top line this quarter, they outperformed our operating profit and margin expectations. We believe the first quarter net sales issues in these segments were discrete and are now largely behind us,” said CEO Sean Connolly.
Conagra stock had increased 40% in the year-to-date period, while it declined 17% in the trailing 12 months.