We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Conagra Brands Stock Gains 12% in 3 Months: Hold Steady or Exit Now?
Read MoreHide Full Article
Conagra Brands, Inc. (CAG - Free Report) has seen its shares gain 12.3% in the past three months compared with the industry’s 7% growth. The branded consumer foods company has also surpassed the broader Zacks Consumer Staples sector and the S&P 500’s respective growth of 7.6% and 0.1%.
Although Conagra Brands has outpaced the industry and market at large, this momentum masks underlying headwinds that could weigh on its performance. The company is grappling with elevated costs as well as challenging industry trends including a slowdown in consumption.
Investors should carefully assess whether Conagra Brands can sustain its growth momentum or if these headwinds could eventually slow down its progress.
Image Source: Zacks Investment Research
What’s Making Things Bitter for CAG Stock?
Like many other food companies, Conagra Brands has been navigating a challenging operating environment. The company continued to witness difficult industry trends, including a slowdown in consumption in the fourth quarter of fiscal 2024. During the quarter, volumes dropped 1.8% year over year, hurting the company’s organic sales, which fell 2.4%. Volumes declined as a result of the continuation of the industry-wide slowdown in consumption and the recent changes in consumer behavior.
Industry-wide macroeconomic challenges have adversely impacted consumer purchasing patterns. For fiscal 2025, organic net sales growth is anticipated to be in the range of 1.5% decline to flat. Management expects first-quarter volumes to be the lowest, with improvements anticipated as the year progresses.
Conagra’s Foodservice unit has been under pressure due to sluggish consumption trends, reflecting broader industry challenges. The segment’s organic sales declined 3.9% year over year to $291.4 million in the fourth quarter. Although the price/mix improved 6.4%, volumes declined 10.3% on account of the ongoing effects of previously unveiled lost business, along with the current sluggishness in restaurant traffic. The persistence of this trend remains a concern as the segment continues to navigate a tough operating environment with ongoing pressures on consumer demand and dining-out behavior.
Conagra has also been encountering cost inflation, though the trend has been moderating of late. In the fourth quarter of fiscal 2024, the adjusted gross margin was partly affected by the inflated cost of goods sold, soft organic sales and adverse operating leverage.
Apart from this, Conagra remains focused on ramping up brand-building investments in fiscal 2025 to enhance volumes and market share. While these strategic investments are crucial for long-term growth, they may weigh on short-term profitability. Management envisions an adjusted EPS in the range of $2.60-$2.65 in fiscal 2025 compared with $2.67 recorded in fiscal 2024.
Where Are Estimates for CAG Stock Trending?
Image Source: Zacks Investment Research
Reflecting the negative sentiment around Conagra Brands, the Zacks Consensus Estimate for EPS has seen downward revisions. Over the past 60 days, analysts have lowered their estimates for both the current quarter and fiscal year by 9.2% and 2.6% to 59 cents per share and $2.62, respectively. These estimates indicate year-over-year declines of 10.6% and 1.9%, respectively.
Investor Playbook for Conagra Brands’ Stock
While the company’s strong brand portfolio and strength in the frozen category offer support, the difficult operating environment and mounting cost challenges remain significant concerns. With these factors in mind, along with declining analyst sentiment, investors should approach cautiously as CAG’s recent momentum may not be sustainable, thereby making it a less attractive option in the current market. The company currently holds a Zacks Rank #4 (Sell).
Better-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Flowers Foods (FLO - Free Report) . While The Chef’s Warehouse currently sports a Zacks Rank #1 (Strong Buy), Ollie's Bargain and Flowers Foods carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chef’s Warehouse has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for CHEF’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for OLLI’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for FLO’s current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Conagra Brands Stock Gains 12% in 3 Months: Hold Steady or Exit Now?
Conagra Brands, Inc. (CAG - Free Report) has seen its shares gain 12.3% in the past three months compared with the industry’s 7% growth. The branded consumer foods company has also surpassed the broader Zacks Consumer Staples sector and the S&P 500’s respective growth of 7.6% and 0.1%.
Although Conagra Brands has outpaced the industry and market at large, this momentum masks underlying headwinds that could weigh on its performance. The company is grappling with elevated costs as well as challenging industry trends including a slowdown in consumption.
Investors should carefully assess whether Conagra Brands can sustain its growth momentum or if these headwinds could eventually slow down its progress.
Image Source: Zacks Investment Research
What’s Making Things Bitter for CAG Stock?
Like many other food companies, Conagra Brands has been navigating a challenging operating environment. The company continued to witness difficult industry trends, including a slowdown in consumption in the fourth quarter of fiscal 2024. During the quarter, volumes dropped 1.8% year over year, hurting the company’s organic sales, which fell 2.4%. Volumes declined as a result of the continuation of the industry-wide slowdown in consumption and the recent changes in consumer behavior.
Industry-wide macroeconomic challenges have adversely impacted consumer purchasing patterns. For fiscal 2025, organic net sales growth is anticipated to be in the range of 1.5% decline to flat. Management expects first-quarter volumes to be the lowest, with improvements anticipated as the year progresses.
Conagra’s Foodservice unit has been under pressure due to sluggish consumption trends, reflecting broader industry challenges. The segment’s organic sales declined 3.9% year over year to $291.4 million in the fourth quarter. Although the price/mix improved 6.4%, volumes declined 10.3% on account of the ongoing effects of previously unveiled lost business, along with the current sluggishness in restaurant traffic. The persistence of this trend remains a concern as the segment continues to navigate a tough operating environment with ongoing pressures on consumer demand and dining-out behavior.
Conagra has also been encountering cost inflation, though the trend has been moderating of late. In the fourth quarter of fiscal 2024, the adjusted gross margin was partly affected by the inflated cost of goods sold, soft organic sales and adverse operating leverage.
Apart from this, Conagra remains focused on ramping up brand-building investments in fiscal 2025 to enhance volumes and market share. While these strategic investments are crucial for long-term growth, they may weigh on short-term profitability. Management envisions an adjusted EPS in the range of $2.60-$2.65 in fiscal 2025 compared with $2.67 recorded in fiscal 2024.
Where Are Estimates for CAG Stock Trending?
Image Source: Zacks Investment Research
Reflecting the negative sentiment around Conagra Brands, the Zacks Consensus Estimate for EPS has seen downward revisions. Over the past 60 days, analysts have lowered their estimates for both the current quarter and fiscal year by 9.2% and 2.6% to 59 cents per share and $2.62, respectively. These estimates indicate year-over-year declines of 10.6% and 1.9%, respectively.
Investor Playbook for Conagra Brands’ Stock
While the company’s strong brand portfolio and strength in the frozen category offer support, the difficult operating environment and mounting cost challenges remain significant concerns. With these factors in mind, along with declining analyst sentiment, investors should approach cautiously as CAG’s recent momentum may not be sustainable, thereby making it a less attractive option in the current market. The company currently holds a Zacks Rank #4 (Sell).
Better-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Flowers Foods (FLO - Free Report) . While The Chef’s Warehouse currently sports a Zacks Rank #1 (Strong Buy), Ollie's Bargain and Flowers Foods carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chef’s Warehouse has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for CHEF’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for OLLI’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for FLO’s current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.