Conagra Brands: A Rocky Road Ahead for FY26 EPS?

Investors in Conagra Brands (CAG) are bracing for a bumpy ride as the company faces mounting headwinds that could derail its fiscal 2026 earnings targets. While analysts project a modest rebound to $2.44 EPS for FY26—a 3.8% rise from FY25’s $2.35—the path to achieving this goal is littered with obstacles. Let’s dissect why this estimate might be overly optimistic and what it means for shareholders.

The Numbers Don’t Lie

Conagra’s third-quarter FY25 results, released in April 2025, painted a grim picture. Diluted EPS plummeted 53.1% year-over-year to $0.30, while adjusted EPS fell 26.1% to $0.51. These figures underscore the severity of the challenges the company is facing, including soaring commodity costs, supply chain disruptions, and brutal competition in the packaged foods sector.

The problem? The 3.8% growth target for FY26 feels overly reliant on a “rebound” that may not materialize. After a 12% EPS collapse in FY25, even a small increase requires flawless execution—a tall order given the ongoing macroeconomic storm.

The Headwinds Are Real

1. Inflation and Commodity Costs: Input costs for ingredients like flour, oils, and packaging remain elevated. Conagra has hiked prices, but consumers are increasingly resistant to paying more, squeezing margins.
2. Supply Chain Chaos: Delays and logistics bottlenecks persist, adding to operational inefficiencies. The company’s Q3 results cited “ongoing supply chain challenges” as a key drag.
3. Fierce Competition: Rival food giants like General Mills and Kellogg are fighting for shelf space and market share, forcing Conagra to invest in marketing and innovation—costs that could eat into profits.

Analysts aren’t buying the rosy FY26 forecast. Of the 16 firms covering CAG, only 3 rate it a “Buy,” while 13 advise a “Hold”. This lukewarm sentiment suggests skepticism about management’s ability to navigate these hurdles.

Can They Turn It Around?

Conagra has pledged to cut costs and streamline operations, but execution is key. The company’s Q3 results showed a 12% reduction in SG&A expenses, but this was overshadowed by a 14% drop in net sales. Meanwhile, new product launches—like its plant-based offerings—are still a small slice of total revenue.

The real test will be whether management can stabilize volumes and pricing. If commodity costs stay high or demand weakens further, the $2.44 EPS target could evaporate.

Bottom Line: Proceed with Caution

The math is simple: Conagra needs a near-flawless FY26 to hit $2.44 EPS. But with inflation, supply chain issues, and a stubbornly weak consumer environment, the odds are stacked against it. Investors should treat this stock as a “Hold” until there’s tangible evidence of margin recovery or top-line growth.

In short, while Conagra’s FY26 EPS target is a start, the path to profitability remains rocky. Until the company proves it can navigate these storms, this isn’t a stock to bet the farm on.