Conagra Beats Earnings Expectations with 5.1% Stock Jump

Conagra surpasses earnings expectations with a 69 cents EPS, driving stock up 5.1% in premarket trading.

By Bill Bullington

4/4, 09:09 EDT
ConAgra Brands, Inc.

Key Takeaway

  • Conagra Brands Inc. beats Q3 earnings expectations with a 5.1% stock jump, reporting earnings of 69 cents per share on $3.03 billion sales.
  • Strategic investments in the frozen sector and cost-saving initiatives led to improved profit margins and volume trends.
  • Adjusted full-year operating margin outlook increased to 15.8%, reflecting confidence in continued growth and market adaptability.

Conagra Beats Earnings Expectations

Conagra Brands Inc., known for its portfolio of food brands including Duncan Hines, Healthy Choice, Hunt’s, and Reddi Wip, reported fiscal third-quarter earnings that exceeded market expectations. The company announced earnings of 69 cents per share on sales of $3.03 billion, surpassing the FactSet consensus of 65 cents per share on revenue of $3.01 billion. This performance led to a 5.1% jump in premarket trading, positioning the stock to open at an eight-month high. Chief Executive Sean Connolly attributed this success to strategic investments, particularly in the frozen sector, which generated significant lifts and unit share gains.

Strategic Investments and Market Adaptation

Conagra's focus on strategic investments, especially in the frozen segment, has paid off, with the company witnessing improved volume trends in its domestic retail business. Connolly noted the "outstanding progress on our cost savings initiatives," which has enabled the company to support strategic investments while sustaining margin recovery. Despite a 1.7% decline in sales, Conagra managed to improve its gross margin by 1.14 percentage points to 28.3%, thanks to a 3.3% reduction in the cost of goods sold.

Portfolio Performance and Outlook

The company's diverse product range has shown varied performance across different segments. The grocery and snacks segment experienced a 3.4% growth in sales to $1.3 billion, despite a slight 0.8% decrease in volume. On the other hand, refrigerated and frozen sales saw an 8.1% drop to $1.2 billion, with a 3.3% fall in volume. However, international sales rose by 4.6% to $272 million. Looking ahead, Conagra has adjusted its full-year adjusted operating margin outlook to 15.8% from 15.6% and reaffirmed its adjusted EPS guidance range of between $2.60 and $2.65.

Market Response and Financial Health

The market has reacted positively to Conagra's earnings report, with shares gaining 4.5% in premarket trading. This uptick reflects investor confidence in the company's strategic direction and its potential for continued growth. Conagra's year-to-date stock performance has seen a 1.4% increase, indicating a strong position in the food industry. The company's ability to exceed financial forecasts, coupled with its optimistic financial outlook, underscores its solid business model and adaptability in a dynamic market environment.

Management Quotes

  • Sean Connolly, CEO of Conagra Brands:

    "Volume trends in our domestic retail business continued to improve as targeted investments, particularly in frozen, generated strong lifts and unit share gains. Outstanding progress on our cost savings initiatives allowed us to support strategic investments in our brands while sustaining margin recovery."