During the quarter, Conagra completed the divestiture of its
DSD model snacks business to Utz Quality Foods. The company had earlier said it
estimated the deal to reduce sales by about $110 million and adjusted EPS by $0.02
annually post-closing. Updates on this transaction are worth watching. Higher
input costs along with expenses related to growth investments are likely to
weigh on margins.
In the first quarter of 2020, Conagra beat earnings estimates while sales fell short of expectations. Sales rose 30% to $2.39 billion while adjusted EPS dropped nearly 9% to $0.43.
Also read: Conagra Q1 2020 Earnings Call Transcript
For fiscal year
2020, Conagra expects adjusted EPS to be $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%.
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.
Shares of Conagra have gained 35% year-to-date. The stock was up 1.6% in afternoon hours on Monday.