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Conagra Brands (CAG) to Post Q4 Earnings: What to Expect?

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Conagra Brands, Inc. (CAG - Free Report) is likely to register declines in its top and bottom lines when it reports fourth-quarter fiscal 2021 numbers on Jul 13.

The Zacks Consensus Estimate for quarterly earnings, which has remained unchanged in the past 30 days at 52 cents per share, indicates a decrease of 30.7% from the year-ago quarter’s reported figure. For fiscal 2021, the consensus mark for earnings is pegged at $2.63 per share, suggesting 15.4% growth from the year-ago period’s reported figure. Conagra’s bottom line outperformed the Zacks Consensus Estimate by 1.7% in the last-reported quarter. The company has a trailing four-quarter earnings surprise of 11.5%, on average.

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $2,734 million, which suggests a sharp fall of 16.9% from the figure reported in the prior-year quarter. For fiscal 2021, the consensus mark for revenues is pegged at $11,174 million, suggesting an increase of 1.1% from the year-ago period’s reported figure.

CONAGRA BRANDS Price and EPS Surprise

CONAGRA BRANDS Price and EPS Surprise

CONAGRA BRANDS price-eps-surprise | CONAGRA BRANDS Quote

Things to Keep in Mind

Conagra has been struggling with its sluggish Foodservice business, thanks to lower away-from-home demand amid the pandemic. In its last earnings release, management highlighted that the company continued to see lower demand in the Foodservice segment in the fourth quarter of fiscal 2021 to-date (till Apr 8) when compared with the pre-pandemic level. Apart from these, pandemic-induced costs as well as inflation in cost of goods sold are likely to have weighed on the company’s margin in the to-be reported quarter.

Management projected a decline of 10-12% in organic sales for the fiscal fourth quarter. It expects operating margin in the range of 14-15%, a decline from year-ago quarter’s reported figure. The downside reflects increased inflation as well as higher advertising and promotion expense investments, among others. Moreover, it forecast adjusted earnings per share between 49 cents and 55 cents for the fiscal fourth quarter, which suggests year-over-year decline.

That being said, healthy demand amid pandemic-led higher at-home consumption has been favoring Conagra’s retail business. The company continued to see a considerable increase in demand in the retail business in the fiscal fourth quarter (till Apr 8). Apart from these, Conagra’s e-commerce sales have been rapidly accelerating since the onset of the pandemic. This, along with prudent product innovation and effective portfolio management efforts, bodes well.

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 carries a Zacks Rank #3 and an Earnings ESP of 0.00%.

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:

Medifast (MED - Free Report) currently has an Earnings ESP of +6.85% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods, Inc. (TSN - Free Report) currently has an Earnings ESP of +29.49% and a Zacks Rank of 3.

Hormel Foods Corporation (HRL - Free Report) currently has an Earnings ESP of +3.63% and a Zacks Rank of 3.

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Conagra Brands (CAG) - free report >>

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MEDIFAST INC (MED) - free report >>