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Conagra Stock (CAG) Rallies After Earnings Miss: What???s Next?
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Conagra Brands (CAG - Free Report) jumped over 3.5% through Friday morning trading, after posting lower-than-projected Q4 fiscal 2019 earnings Thursday. The packaged foods giant reported quarterly EPS of $0.36, which came in $0.06, or -14.29% lower than our Zacks Consensus Estimate. Friday’s rally came after Conagra stock fell 12% Thursday, which signals that some investors think the selloff might have been overdone.
The Chicago, Illinois-headquarter company owns a variety of popular brands including Chef Boyardee, Reddi-wip, Mrs. Butterworth’s, and Orville Redenbacher’s.
The earnings miss came two months after the company forecasted a strong end to fiscal 2019 at its Investor Day. At Investor Day, Conagra also provided fiscal 2020 EPS guidance between $2.10 and $2.20. Conagra executives then lowered their guidance by $0.02 Thursday, to account for the sale of its Gelit business, an Italian frozen pasta maker, in May.
Conagra did post year over year revenue growth, reaching $9.54 billion for fiscal 2019, compared to $7.94 billion the year before. That’s a difference of $1.6 billion from fiscal 2018, however Pinnacle generated $1.7 billion in revenue in fiscal 2019, which accounts for the year over year growth. The $1.6 billion increase represented 20.2% total revenue growth, despite declining sales in three out of five segments, those being Grocery and Snacks, International sales, and Foodservice. More specifically, Grocery and Snack sales slipped 7.1%, Refrigerated and Frozen good sales fell 0.6%, International sales fell 7.4%, and Foodservice sales tumbled 12.6%.
Conagra’s Refrigerated & Frozen segment increased sales by 1.9%.
Outlook
Conagra is expected to report significant earnings and revenue growth for fiscal 2020. Zacks Consensus Estimates call for fiscal 2020 (Conagra begins its fiscal years in June) earnings to grow 7.96% on the back of 13.96% revenue growth. Looking further ahead, fiscal 2021 is expected to bring 9.5% earnings growth and 0.36% revenue growth on top of their respective fiscal 2020 numbers.
After falling all the way to $25.15 Thursday, the stock has climbed back up and is currently trading at $26.42, as of 2:30 PM ET. Analysts are still bullish on the stock. Bank of America Merrill Lynch (BAC - Free Report) reiterated a “Buy” rating on the stock following the earnings. Conagra also currently holds a Zacks Rank #2 (Buy), but this could change as more analysts update their estimates over the next serval days. Even after the stock had a poor day Thursday, it is still up 24% YTD, significantly outperforming the S&P 500.
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Conagra Stock (CAG) Rallies After Earnings Miss: What???s Next?
Conagra Brands (CAG - Free Report) jumped over 3.5% through Friday morning trading, after posting lower-than-projected Q4 fiscal 2019 earnings Thursday. The packaged foods giant reported quarterly EPS of $0.36, which came in $0.06, or -14.29% lower than our Zacks Consensus Estimate. Friday’s rally came after Conagra stock fell 12% Thursday, which signals that some investors think the selloff might have been overdone.
The Chicago, Illinois-headquarter company owns a variety of popular brands including Chef Boyardee, Reddi-wip, Mrs. Butterworth’s, and Orville Redenbacher’s.
The earnings miss came two months after the company forecasted a strong end to fiscal 2019 at its Investor Day. At Investor Day, Conagra also provided fiscal 2020 EPS guidance between $2.10 and $2.20. Conagra executives then lowered their guidance by $0.02 Thursday, to account for the sale of its Gelit business, an Italian frozen pasta maker, in May.
Conagra did post year over year revenue growth, reaching $9.54 billion for fiscal 2019, compared to $7.94 billion the year before. That’s a difference of $1.6 billion from fiscal 2018, however Pinnacle generated $1.7 billion in revenue in fiscal 2019, which accounts for the year over year growth. The $1.6 billion increase represented 20.2% total revenue growth, despite declining sales in three out of five segments, those being Grocery and Snacks, International sales, and Foodservice. More specifically, Grocery and Snack sales slipped 7.1%, Refrigerated and Frozen good sales fell 0.6%, International sales fell 7.4%, and Foodservice sales tumbled 12.6%.
Conagra’s Refrigerated & Frozen segment increased sales by 1.9%.
Outlook
Conagra is expected to report significant earnings and revenue growth for fiscal 2020. Zacks Consensus Estimates call for fiscal 2020 (Conagra begins its fiscal years in June) earnings to grow 7.96% on the back of 13.96% revenue growth. Looking further ahead, fiscal 2021 is expected to bring 9.5% earnings growth and 0.36% revenue growth on top of their respective fiscal 2020 numbers.
After falling all the way to $25.15 Thursday, the stock has climbed back up and is currently trading at $26.42, as of 2:30 PM ET. Analysts are still bullish on the stock. Bank of America Merrill Lynch (BAC - Free Report) reiterated a “Buy” rating on the stock following the earnings. Conagra also currently holds a Zacks Rank #2 (Buy), but this could change as more analysts update their estimates over the next serval days. Even after the stock had a poor day Thursday, it is still up 24% YTD, significantly outperforming the S&P 500.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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