ConAgra Brands (CAG) Plunges 7.65% on Missed Earnings

ConAgra Brands (CAG) shares plummeted 7.65% intraday, marking the lowest level since July 2009. The stock has been on a downward spiral, declining 4.37% today and 5.62% over the past two days.

The strategy of purchasing ConAgra Brands (CAG) shares after they reached a recent low and holding for one week yielded poor performance over the past five years. The annualized return was -0.68%, significantly underperforming the market, with a total shareholder return (TSR) of -30%.. This indicates that relying on recent price lows as a decision metric and holding for a short duration is not a profitable approach for CAG.

Significance of the Performance: The annualized return of -0.68% implies that over the five-year period, an investor would have generated losses instead of gains. This is a clear indication that the strategy was not aligned with profitability.

Comparison with Market Performance: The strategy's performance was significantly worse than the market average, which suggests that there might have been better opportunities for investment elsewhere.

Dividend Impact: The TSR of -30% was largely a result of the company's dividend payments, which is a key consideration for income-focused investors. However, the overall negative return highlights a broader issue with the investment strategy.

In conclusion, the backtest reveals that buying CAG shares after they reached a recent low and holding for one week is not a viable strategy, given the poor performance relative to the market and the negative total shareholder returns. This underscores the importance of reevaluating investment strategies that rely on recent price lows as entry points, especially when combined with short holding periods.

ConAgra Brands reported earnings per share (EPS) of $0.56 for Q4 fiscal 2025, falling short of analyst estimates by 5.08%. The company's revenue also missed expectations, coming in at $2.78 billion, which was a 2.18% shortfall. Over the past four quarters, ConAgra has only exceeded EPS estimates once, indicating a consistent struggle to meet market expectations.

Analysts have revised fiscal 2025 EPS estimates downward by 12.7% year-over-year, with projected revenue declining 3% to $11.7 billion. This revision reflects a pessimistic outlook for the company, as persistent inflation in input and protein costs continues to erode margins. Weak demand, particularly in the Foodservice segment, further complicates ConAgra's recovery efforts.

The broader food industry is grappling with significant challenges, and ConAgra appears to be struggling more than some of its peers. These sector-wide headwinds, combined with internal issues such as cost management and demand stabilization, have led to a Zacks Rank #5 (Strong Sell) for the company. ConAgra's challenges are both structural and cyclical, exacerbated by sector-wide stagnation and specific internal problems.