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Conagra (CAG) to Report Q2 Earnings: What's in the Offing?

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Conagra Brands, Inc. (CAG - Free Report) is likely to register growth in the top and the bottom lines when it reports second-quarter fiscal 2021 numbers on Jan 7. The Zacks Consensus Estimate for revenues is pegged at $2,992 million, which suggests a rise of 6.1% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the bottom line has been unchanged in the past 30 days at 73 cents per share, which indicates an increase of 15.9% from the year-ago quarter’s figure. Conagra’s bottom line outperformed the Zacks Consensus Estimate by 22.8% in the last reported quarter. Moreover, the company has a trailing four-quarter earnings surprise of 9.9%, on average.

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

The company is benefiting from rising demand amid coronavirus-led stockpiling of essential items and increased at-home consumption. These trends also drove Conagra’s retail business in first-quarter fiscal 2021, wherein organic sales increased on the back of higher at-home consumption. Notably, sales grew across Staples, Frozen and Snacks categories. The company continued to see a considerable increase in demand in the retail business in the second quarter of fiscal 2021 (till Oct 1). Considering these factors and assuming a smooth supply chain, management expects organic sales growth of 6-8% in the second quarter of fiscal 2021. Adjusted operating margin is likely to be 18-18.5%, while adjusted earnings per share (EPS) are envisioned between 70 cents and 74 cents.

Notably, Conagra is focused on boosting the Frozen and Snacks businesses. Frozen has indeed picked up more pace in the current situation, with consumers stocking up and eating at home. Management expects at-home eating trends to stay high for a while. The company is well positioned to tap opportunities related to the same.

While coronavirus-led increased at-home trends have boosted Conagra’s retail business, the same is dealing a blow to the Foodservice segment for a while now. Organic sales in the segment fell 20.3% in the last reported quarter, with volumes bearing the brunt of reduced restaurant traffic. Apart from this, escalated costs related to the outbreak are likely to affect the company’s performance in the quarter to be reported.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Conagrathis 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.

Conagracurrently has a Zacks Rank #4 (Sell) and an Earnings ESP of +2.54%.

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.

Brown-Forman Corporation (BF.B - Free Report) currently has an Earnings ESP of +1.27% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Constellation Brands (STZ - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank #3, currently.

Bed Bath &Beyond has an Earnings ESP of +32.28% and a Zacks Rank #3, at present.

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