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Things You Must Know Ahead of Conagra's (CAG) Q3 Earnings

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Conagra Brands, Inc. (CAG - Free Report) is scheduled to release third-quarter fiscal 2020 results on Mar 31. Notably, the company delivered a positive earnings surprise of 10.5% in the last reported quarter. Also, the company’s earnings beat the Zacks Consensus Estimate by 3.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 49 cents per share, which suggests a 3.9% decline from the year-ago quarter’s reported figure. Notably, the consensus mark has moved down by a penny in the past 30 days. The consensus mark for revenues is at $2,580 million, which suggests a 4.7% drop from the year-ago quarter’s reported figure.

Conagra Brands Inc. Price and EPS Surprise

Conagra Brands Inc. Price and EPS Surprise

Conagra Brands Inc. price-eps-surprise | Conagra Brands Inc. Quote

Key Factors

In its last earnings call, Conagra stated that it was already seeing weaker-than-anticipated category performance in third-quarter fiscal 2020 (ending on Feb 23, 2020), which impacted a broad range of categories in the food space, including those wherein Conagra operates. Management stated that weak consumption trends were first noticed in the foodservice industry with lower restaurant traffic during the holiday season. Further, this softness extended to the retail space in January, which in turn weighed on several food categories. Although Conagra was anticipating tough year-over-year comparisons for the third quarter, it saw greater-than-expected category weakness.

Apart from this, the company has been battling input cost inflation. For fiscal 2020, management expects inflation stemming from protein. This is likely to have affected the company’s performance in the quarter under review as well.

Nonetheless, Conagra’s focus on innovation and brand-building to strengthen its frozen and snacking businesses bodes well. Toward this end, the buyout of Pinnacle Foods (concluded in October 2018) has been aiding the top line. Management expects contributions from innovation in the frozen and snacks categories, promotions of key brands, constant synergies and Pinnacle Foods’ action plan to positively impact the company’s performance in the second half of fiscal 2020.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Conagra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Conagra carries a Zacks Rank #3 (Hold) and an Earnings ESP of -1.02%.

Stocks With Favorable Combinations

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Church & Dwight (CHD - Free Report) currently has an Earnings ESP of +8.40% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimberly-Clark (KMB - Free Report) has an Earnings ESP of +1.76% and a Zacks Rank #3.

Helen of Troy (HELE - Free Report) currently has an Earnings ESP of +0.78% and a Zacks Rank of 3.

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