How did CAG's Q2 2025 EPS surprise the market?

Conagra Brands' Q2 2025 EPS did not surprise the market as it was not reported. However, the company's Q3 2025 EPS of $0.30, marking a 53.1% decrease, fell short of the estimated $0.54, reflecting a significant decline and disappointing market expectations.

1. **EPS Decrease**: The most notable surprise was the 53.1% decrease in reported diluted EPS, which dropped to $0.30 from $0.69 in the same quarter of the previous year. This significant decline was a result of various factors including a 6.3% decline in net sales, a 17.9% drop in adjusted EBITDA, and a 17.6% reduction in the International segment's net sales.
2. **Revenue Shortfall**: Conagra Brands fell short of market anticipations with a revenue of $2.8 billion, missing the estimated $2.90292 billion by 1.67%. This decline was attributed to a 5.2% drop in organic net sales, compounded by negative impacts from foreign exchange and mergers and acquisitions.
3. **Operational Challenges**: The company's gross profit decreased by 17.3% to $710 million, and the adjusted gross profit decreased by 19.1% to $704 million. The gross margin also saw a decline, decreasing by 331 basis points to 25.0%, with the adjusted gross margin falling by 389 basis points to 24.8%. These declines indicate challenges in maintaining profit margins amidst lower net sales and inflation in the cost of goods sold.
4. **Market Expectations**: Analysts had anticipated a more robust performance, with an expected adjusted EPS of approximately $2.35 for the fiscal year 2025, which aligned with the company's guidance. However, the reported adjusted EPS of $0.51 for Q3 2024-25 fell below this estimate, representing a 26.1% drop.

In summary, Conagra Brands' Q3 2025 EPS did not surprise the market as it was not reported, but the company's financial performance fell significantly short of market expectations, marked by a substantial EPS decline and revenue shortfall.