Conagra Brands Surpasses Earnings Expectations but Faces Revenue Declines and Analysts Downgrade

Conagra Brands reported a Q4 EPS beat, but its shares underperformed the market and its sector. The company's financial results for 2024 show a dependence on the Grocery & Snacks segment for profit. Despite a slight revenue decline, Conagra increased margins significantly. However, analysts slashed price targets after the report, signaling potential concerns about the firm's future performance.

Conagra Brands (CAG) reported fourth-quarter fiscal 2024 earnings that surpassed analyst estimates, but the company's shares underperformed the market and its sector [1]. Despite the earnings beat, Conagra Brands' financial results for the year 2024 demonstrate a dependence on the Grocery & Snacks segment for profit [2].

The quarter saw a slight revenue decline of 2.3% to $2,905.9 million, missing the consensus estimate of $2,939 million. However, the company managed to increase its margins significantly, with the adjusted gross margin expanding by 62 basis points year over year [2].

Conagra Brands' strategic investments in brands have proven effective, driving volume improvements in its Domestic Retail business, particularly in the Frozen and Snacks categories [2]. The company's supply chain productivity efforts have also contributed to the expansion of adjusted gross margins.

Despite these positive developments, analysts have expressed concerns about Conagra Brands' future performance, leading to a decline in price targets [1]. The company faces challenges from a slowdown in consumption, which negatively impacted organic net sales by 2.4% year over year [2].

The industry continues to experience difficult trends, with consumers adapting to new reference prices and the continuation of the slowdown in consumption [2]. However, management anticipates a gradual easing of these challenges as consumers adapt.

Sources:

[1] Conagra Brands Reports Fourth-Quarter Results and Quarterly Dividend. (2022, July 11). Retrieved from https://www.conagrabrands.com/news-room/news-conagra-brands-reports-fourth-quarter-results-and-quarterly-dividend-prn-122894

[2] Conagra Brands Q4 Earnings Top, Shares Down. (2022, July 11). Retrieved from https://finance.yahoo.com/news/conagra-cag-q4-earnings-top-165800469.html