What to expect when Conagra Brands (CAG) reports Q2 2024 earnings

Shares of Conagra Brands, Inc. (NYSE: CAG) were up over 3% on Tuesday. The stock has dropped 23% over the past year. The branded food company is set to report its second quarter 2024 earnings results on Thursday, January 4, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $3.24 billion for Conagra in the second quarter of 2024. This compares to $3.3 billion reported in the same period last year. In the first quarter of 2024, net sales remained flat year-over-year at $2.9 billion.  

Earnings

The consensus estimate for EPS in Q2 2024 is $0.68, which compares to adjusted EPS of $0.81 reported in the prior-year period. In Q1 2024, adjusted EPS rose 16% to $0.66. Conagra expects adjusted EPS for Q2 to remain approx. flat to Q1.

Points to note

Conagra’s top line performance last quarter was impacted by an industry-wide slowdown in consumption and changes in consumer purchasing behavior amid financial pressures. These changes will lead to volumes taking longer than expected to recover.

The company expects a low-single-digit decline in organic net sales for the second quarter of 2024. In Q1, organic sales dipped 0.3%, driven by a 6.6% drop in volume. Conagra expects volume declines to improve sequentially in Q2 as it wraps inflation-driven pricing actions from 2023.

The company’s margins increased in the first quarter benefiting from pricing actions and productivity. However, it expects margins to decline sequentially in Q2 due to increased growth investments.

Conagra has been seeing financially-constrained consumers resort to various measures to make their budgets work. These include using up leftover inventory from the pandemic, and resorting to more hands-on food prep rather than opting for convenient foods. These trends have impacted the company’s Refrigerated and Frozen segment the most. Nevertheless, it believes this softness is temporary due to the significant position convenient foods holds in in-home consumption.

Conagra’s Grocery and Snacks segment saw growth last quarter as the staples category remained resilient and snacks witnessed continued growth. The International and Foodservice segments also saw growth last quarter. This momentum is likely to have continued through the second quarter as well.