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Here's All You Should Note Before Conagra's (CAG) Q1 Earnings

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Conagra Brands, Inc. (CAG - Free Report) is likely to register an increase in the top and bottom lines when it reports first-quarter fiscal 2021 numbers on Oct 1, before market open. The Zacks Consensus Estimate has remained stable over the past 30 days at 57 cents per share, which suggests a 32.6% increase from the figure reported in the prior-year period. Notably, Conagra delivered an earnings surprise of 10.3% in the last reported quarter. Also, this renowned food company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for revenues is pegged at $2,611 million, indicating a rise of 9.2% from the prior-year quarter’s reported figure.

Conagra Brands Inc. Price, Consensus and EPS Surprise

Conagra Brands Inc. Price, Consensus and EPS Surprise

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

Key Factors to Note

Conagra has been benefiting from the rising demand amid coronavirus-led stockpiling of essential items and increased at-home consumption. These trends have been driving its retail business and helping the company offset softness in the Foodservice segment, which has been bearing the brunt of reduced restaurant traffic amid the pandemic. Also, the company has been witnessing elevated costs related to COVID-19, including investments in employees’ safety, bonuses for supply-chain workers and other costs related to catering to the burgeoning demand. These costs continued in first-quarter fiscal 2021 (till Jun 30).

Nonetheless, Conagra has been benefiting from the solid e-commerce business, considerable consumer trials, robust repeat sales and initial launches of fiscal 2021’s planned innovation. In fact, focus on innovation and prudent buyouts have long been strengthening the company’s portfolio. In its last earnings call, management stated that it continued to see a considerable increase in demand in the retail business in the first quarter of fiscal 2021 (till Jun 30).

Considering all factors and assuming a smooth supply chain, management expects organic sales growth of 10-13% in the first quarter of fiscal 2021. Adjusted operating margin is likely to be 17-17.5%, while adjusted EPS is envisioned between 54 cents and 59 cents.

What the Zacks Model Unveils

Our proven model doesn’t 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Conagra currently has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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

Newell Brands (NWL - Free Report) has an Earnings ESP of +37.16% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimberly-Clark (KMB - Free Report) has an Earnings ESP of +2.65% and a Zacks Rank #2.

Philip Morris (PM - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #3.

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