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Conagra Brands (CAG) Queued for Q2 Earnings: Things to Note

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Conagra Brands, Inc. (CAG - Free Report) is likely to register top-line growth when it reports second-quarter fiscal 2022 numbers on Jan 6. The Zacks Consensus Estimate for revenues is pegged at $3,057 million, suggesting an increase of 2.1% from the prior-year quarter’s reported figure.

Conagra’s bottom line is likely to decline year over year in the fiscal second quarter. Although the Zacks Consensus Estimate for quarterly earnings has moved up by a penny to 68 cents per share in the past 30 days, the projection suggests a 16.1% slump from the year-ago quarter’s reported figure. In the last reported quarter, the company delivered an earnings surprise of 4.2%. This consumer packaged goods food company has a trailing four-quarter earnings surprise of 4.7%, on average.

Conagra Brands Price and EPS Surprise

 

Conagra Brands Price and EPS Surprise

Conagra Brands price-eps-surprise | Conagra Brands Quote

 

Things to Note

Conagra has been benefiting from efficient pricing initiatives. In the fiscal first quarter, price/mix improved 1.6% and aided organic sales growth. The company is also seeing recovery in its Foodservice business, as restaurant traffic is picking up with the pandemic-led curbs being lifted and people moving out.

Conagra’s e-commerce investments have been yielding favorable results. Apart from this, the company is on track with a range of innovation and brand-building efforts to explore growth prospects in its frozen and snacks businesses. These factors are likely to have driven Conagra’s performance in the to-be-reported quarter.

However, Conagra has been encountering cost of goods sold inflation. Management, in its last earnings call, highlighted that it expects cost inflation of nearly 11% in fiscal 2022 compared with 9% predicted earlier. Most of the incremental inflation might be attributed to higher cost of proteins, edible fats and oils, grains as well as steel cans. This, in turn, is likely to have hurt Conagra’s performance in the quarter under review. In addition, its brand-building investments might also impact its margins. Apart from this, the company’s performance is prone to the impact of divestitures.

What the Zacks Model Unveils

Our proven model does not 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 carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -2.46%.

Stocks With Favorable Combinations

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

Constellation Brands (STZ - Free Report) currently has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is expected to register a bottom-line decline when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for its quarterly earnings has remained unchanged in the past 30 days at $2.82 per share. The projection suggests a 8.7% decline from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

Constellation Brands’ top line is expected to fall year over year. The consensus mark for revenues is pegged at $2,282 million, indicating a decline of 6.4% from the figure reported in the year-ago quarter. STZ has a trailing four-quarter earnings surprise of 8.8%, on average.

McCormick & Company, Incorporated (MKC - Free Report) currently has an Earnings ESP of +0.75% and a Zacks Rank #3. The company is expected to register a bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly earnings has remained unchanged in the past 30 days at 80 cents per share. The projection suggests a 1.3% increase from the year-ago quarter’s reported figure.

McCormick’s top line is expected to increase year over year. The consensus mark for revenues is pegged at $1,707 million, indicating an increase of 9.6% from the figure reported in the year-ago quarter. MKC has a trailing four-quarter earnings surprise of 10.3%, on average.

The J. M. Smucker Company (SJM - Free Report) currently has an Earnings ESP of +0.24% and a Zacks Rank #3. The company is expected to register a bottom-line decline when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for its quarterly earnings has moved down a penny to $2.07 per share in the past 30 days. The projection suggests a 15.5% slump from the year-ago quarter’s reported figure.  

Smucker’s top line is expected to decline year over year. The consensus mark for revenues is pegged at $2,050 million, indicating a dip of 1.3% from the figure reported in the year-ago quarter. SJM has a trailing four-quarter earnings surprise of 10.8%, on average.

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