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What's in the Offing for Conagra Brands (CAG) in Q3 Earnings?
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Conagra Brands, Inc. (CAG - Free Report) is likely to witness a year-over-year increase in the top line when it reports third-quarter fiscal 2022 earnings on Apr 7. The Zacks Consensus Estimate for revenues is pegged at $2,836 million, suggesting a rise of 2.3% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for earnings has risen by a penny over the past seven days to 57 cents per share. However, this indicates a decline of 3.4% from the figure reported in the prior-year period. Conagra Brands, a consumer packaged goods food company, has a trailing four-quarter earnings surprise of 0.5%, on average. CAG delivered a negative earnings surprise of 5.9% in the last reported quarter.
Conagra has been encountering cost of goods sold inflation for a while now. Despite raising its fiscal 2022 organic net sales guidance, management kept its bottom line intact due to the expected cost of goods sold inflation. In the second quarter of fiscal 2022, the adjusted gross margin contracted 483 basis points to 25.1% due to greater-than-anticipated cost of goods sold inflation, elevated transitionary supply-chain expenses and increased investments related to prioritizing servicing orders for maximizing food supply for consumers.
On its last earnings call, management lowered its adjusted operating margin view due to increased cost of goods sold inflation and the timing of extra pricing activities. Though it is taking necessary pricing and saving actions, the effect of these initiatives is likely to aid margins in the second half of fiscal 2022. Gross inflation is likely to be 14% in fiscal 2022 compared with nearly 11% expected before. Third-quarter margins are likely to have been nearly in line with the second quarter, which raises concerns. Apart from this, the potential impact of divestitures is also likely to have an adverse effect on sales. In the second quarter, Conagra’s net sales growth was partly affected by the divestiture of the H.K. Anderson business, the Peter Pan peanut butter business and the Egg Beaters business. The divestitures are collectively referred to as Sold Businesses. In the second quarter, divestitures adversely impacted net sales by 0.7%.
That said, pricing is likely to have offered a partial respite as mentioned above. CAG is also seeing recovery in its Foodservice business as restaurant traffic is picking up, with pandemic-led curbs lifted and a rising outdoor movement. With a continued rise in outdoor dining trends, the company’s Foodservice business looks well-placed. Conagra’s e-commerce investments have also been yielding favorable results. These aspects, together with a focus on innovation, bode well for the third quarter.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Conagra Brands this time. 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, which is not the case here.
Conagra Brands currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
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 in the to-be-reported quarter.
Fastenal Company (FAST - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports first-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 44 cents suggests growth of 18.9% from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Fastenal’s revenues is pegged at $1.67 billion, indicating an increase of 17.9% from the year-ago quarter. FAST has a trailing four-quarter earnings surprise of 3.3%, on average.
Helen of Troy (HELE - Free Report) has an Earnings ESP of +2.49% and a Zacks Rank #3. It is anticipated to register a bottom-line increase when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for Helen of Troy’s revenues is pegged at $472 million, indicating a decline of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Helen of Troy’s quarterly earnings is pegged at $2.01 per share, suggesting growth of around 28% from the year-ago quarter’s reported figure. HELE delivered an earnings beat of 18.1%, on average, in the trailing four quarters.
TreeHouse Foods (THS - Free Report) ) has an Earnings ESP of +3.20% and a Zacks Rank #3. The company is expected to register top-line growth when it reports fourth-quarter 2021 results. The consensus mark for revenues is pegged at $1,085 million, indicating an increase of 2.6% from the year-ago quarter.
The Zacks Consensus Estimate for TreeHouse Foods’ bottom line stands at a loss of 55 cents per share, which suggests a significant decline from the year-ago quarter’s reported figure of earnings of 36 cents. THS has a trailing four-quarter earnings surprise of 11.9%, on average.
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What's in the Offing for Conagra Brands (CAG) in Q3 Earnings?
Conagra Brands, Inc. (CAG - Free Report) is likely to witness a year-over-year increase in the top line when it reports third-quarter fiscal 2022 earnings on Apr 7. The Zacks Consensus Estimate for revenues is pegged at $2,836 million, suggesting a rise of 2.3% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for earnings has risen by a penny over the past seven days to 57 cents per share. However, this indicates a decline of 3.4% from the figure reported in the prior-year period. Conagra Brands, a consumer packaged goods food company, has a trailing four-quarter earnings surprise of 0.5%, on average. CAG delivered a negative earnings surprise of 5.9% in the last reported quarter.
Conagra Brands Price, Consensus and EPS Surprise
Conagra Brands price-consensus-eps-surprise-chart | Conagra Brands Quote
Key Factors to Consider
Conagra has been encountering cost of goods sold inflation for a while now. Despite raising its fiscal 2022 organic net sales guidance, management kept its bottom line intact due to the expected cost of goods sold inflation. In the second quarter of fiscal 2022, the adjusted gross margin contracted 483 basis points to 25.1% due to greater-than-anticipated cost of goods sold inflation, elevated transitionary supply-chain expenses and increased investments related to prioritizing servicing orders for maximizing food supply for consumers.
On its last earnings call, management lowered its adjusted operating margin view due to increased cost of goods sold inflation and the timing of extra pricing activities. Though it is taking necessary pricing and saving actions, the effect of these initiatives is likely to aid margins in the second half of fiscal 2022. Gross inflation is likely to be 14% in fiscal 2022 compared with nearly 11% expected before. Third-quarter margins are likely to have been nearly in line with the second quarter, which raises concerns. Apart from this, the potential impact of divestitures is also likely to have an adverse effect on sales. In the second quarter, Conagra’s net sales growth was partly affected by the divestiture of the H.K. Anderson business, the Peter Pan peanut butter business and the Egg Beaters business. The divestitures are collectively referred to as Sold Businesses. In the second quarter, divestitures adversely impacted net sales by 0.7%.
That said, pricing is likely to have offered a partial respite as mentioned above. CAG is also seeing recovery in its Foodservice business as restaurant traffic is picking up, with pandemic-led curbs lifted and a rising outdoor movement. With a continued rise in outdoor dining trends, the company’s Foodservice business looks well-placed. Conagra’s e-commerce investments have also been yielding favorable results. These aspects, together with a focus on innovation, bode well for the third quarter.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Conagra Brands this time. 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, which is not the case here.
Conagra Brands currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
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 in the to-be-reported quarter.
Fastenal Company (FAST - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports first-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 44 cents suggests growth of 18.9% from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Fastenal’s revenues is pegged at $1.67 billion, indicating an increase of 17.9% from the year-ago quarter. FAST has a trailing four-quarter earnings surprise of 3.3%, on average.
Helen of Troy (HELE - Free Report) has an Earnings ESP of +2.49% and a Zacks Rank #3. It is anticipated to register a bottom-line increase when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for Helen of Troy’s revenues is pegged at $472 million, indicating a decline of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Helen of Troy’s quarterly earnings is pegged at $2.01 per share, suggesting growth of around 28% from the year-ago quarter’s reported figure. HELE delivered an earnings beat of 18.1%, on average, in the trailing four quarters.
TreeHouse Foods (THS - Free Report) ) has an Earnings ESP of +3.20% and a Zacks Rank #3. The company is expected to register top-line growth when it reports fourth-quarter 2021 results. The consensus mark for revenues is pegged at $1,085 million, indicating an increase of 2.6% from the year-ago quarter.
The Zacks Consensus Estimate for TreeHouse Foods’ bottom line stands at a loss of 55 cents per share, which suggests a significant decline from the year-ago quarter’s reported figure of earnings of 36 cents. THS has a trailing four-quarter earnings surprise of 11.9%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.