What to look for when Conagra Brands (CAG) reports Q1 2024 earnings results next week

Shares of Conagra Brands, Inc. (NYSE: CAG) were down over 1% on Wednesday. The stock has dropped 28% year-to-date and 16% over the past three months. The branded foods company is scheduled to report its first quarter 2024 earnings results on Thursday, October 5, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are forecasting revenue of $2.96 billion for Conagra in the first quarter of 2024, which would represent a growth of nearly 4% from the same period a year ago. In the fourth quarter of 2023, sales increased 2.2% year-over-year to $3 billion.

Earnings

The consensus estimate for EPS is $0.60, which is higher than the $0.57 reported in the year-ago period. In Q4 2023, adjusted EPS decreased 5% YoY to $0.62.

Points to note

On its Q4 conference call, Conagra said it expected to see a more normalized operating environment in FY2024 with an ease in inflationary pressures and an improvement in supply chain operations. The company expects its productivity initiatives and investments in innovation to drive growth in the upcoming fiscal year, which bodes well for the first quarter too.

At the same time, it appears customers are buying fewer items overall which has led to a lag in volume recovery. This trend is expected to be a headwind in the near term. Volumes may have been impacted by this in the first quarter.

In the fourth quarter, sales growth was driven by a nearly 10% improvement in price/mix, which was partly offset by a nearly 8% decline in volume. Gross profit benefited from higher organic net sales and productivity. Gross margin increased 183 basis points to 26.3% in Q4.

In Q4, Conagra saw sales growth across all its segments, except for Refrigerated & Frozen, which was driven by favorable price/mix. Volumes, however, declined across all segments. The company gained share in categories like snacks, pasta, sauces and multi-serve meals. These trends are likely to continue in the first quarter.