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Conagra Brands, Inc. (CAG - Free Report) has delivered mixed results for the third quarter of fiscal 2024. In the quarter, the top and bottom lines declined year over year. Results have been affected by lower volumes stemming from the slowdown in consumption and the adverse impacts of pricing in certain segments. However, sales and earnings surpassed the Zacks Consensus Estimate.
Quarter in Detail
Conagra’s quarterly adjusted earnings per share (EPS) came in at 69 cents, beating the Zacks Consensus Estimate of 63 cents. The bottom line declined 9.2% year over year.
This Zacks Rank #4 (Sell) company generated net sales of $3,032.9 million, which dropped 1.7% year over year. However, the metric beat the Zacks Consensus Estimate of $3,013 million. The top line included a 0.3% positive impact of currency movements.
Organic net sales decreased 2% year over year due to a 1.8% drop in volumes, which stemmed from the continuation of the slowdown in consumption. Also, the price/mix had a 0.2% adverse impact on organic sales as a result of elevated strategic investments. Our model suggested a year over year volume decline of 1.6% for the third quarter.
The adjusted gross profit increased 0.1% year over year to $870 million. The adjusted gross margin improved 52 basis points (bps) to 28.7%. This was due to higher productivity, which more than offset the adverse impacts of lower organic net sales, cost of goods sold inflation and unfavorable operating leverage.
Adjusted SG&A expenses, excluding advertising and promotional costs, increased 7.4% year over year to $286 million due to higher incentive compensation.
Adjusted EBITDA (including equity method investment earnings, and the pension and post-retirement non-service income) descended 5.3% year over year to $634 million, mainly led by lower adjusted operating profit.
Segmental Details
Grocery & Snacks: Quarterly net sales in the segment came in at $1.3 billion, up 3.4% year over year. Organic sales also increased 3.4% on a 4.2% rise in the price/mix and a 0.8% drop in volumes. During the quarter, CAG saw dollar share gains in staple and snacking categories like chili, pudding, microwave popcorn, seeds and canned meat.
Refrigerated & Frozen: Net sales and organic sales declined 8.1% year over year to $1.2 billion. Our model suggested a 4% decline in net sales and organic sales for the quarter under review. The price/mix fell 4.8%, with volumes down 3.3%. The company saw improvements in frozen sides, frozen breakfasts, frozen seafood and frozen single-serve meals.
International: Net sales advanced 4.6% year over year to $272 million, reflecting improved organic net sales (up 1%) and positive currency effects (3.6%). We expected sales growth of 5.5% for the segment. Organic sales growth was driven by the price/mix (which dipped 1.7%) and volumes (which rose 2.7% due to strength in the Mexico business).
Foodservice: Reported and organic sales declined 1% year over year to $273 million. The price/mix improved 3.8%, whereas volumes declined 4.8%.
Other Updates
The company exited the fiscal third quarter with cash and cash equivalents of $78.5 million, senior long-term debt (excluding current installments) of $7.5 billion, and total stockholders’ equity of $9.2 billion. Conagra paid out a dividend of 35 cents per share in the fiscal third quarter.
Guidance
For fiscal 2024, organic net sales are anticipated to decrease 1-2% year over year. The adjusted operating margin is expected to be 15.8%, slightly rising from the earlier mentioned 15.6%.
Management envisions an adjusted EPS of $2.60-$2.65. The company reported an adjusted EPS of $2.77 in fiscal 2023.
For fiscal 2024, the net leverage ratio is anticipated to be 3.44X. Capital expenditure is likely to be $425 million, interest expenses are expected at $435 million and the adjusted effective tax rate is forecast at 24%.
Shares of the company have rallied 11.8% in the past six months compared with the industry’s growth of 13.8%.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings suggests growth of 15.2% and 3.4%, respectively, from the year-ago reported numbers.
Celsius Holdings (CELH - Free Report) specializes in commercializing healthier, nutritional, functional foods, beverages and dietary supplements. The company currently carries a Zacks Rank #2 (Buy)-.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 41.6% each from the year-ago reported numbers. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
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Conagra (CAG) Q3 Earnings Beat, Organic Sales Decline Y/Y
Conagra Brands, Inc. (CAG - Free Report) has delivered mixed results for the third quarter of fiscal 2024. In the quarter, the top and bottom lines declined year over year. Results have been affected by lower volumes stemming from the slowdown in consumption and the adverse impacts of pricing in certain segments. However, sales and earnings surpassed the Zacks Consensus Estimate.
Quarter in Detail
Conagra’s quarterly adjusted earnings per share (EPS) came in at 69 cents, beating the Zacks Consensus Estimate of 63 cents. The bottom line declined 9.2% year over year.
This Zacks Rank #4 (Sell) company generated net sales of $3,032.9 million, which dropped 1.7% year over year. However, the metric beat the Zacks Consensus Estimate of $3,013 million. The top line included a 0.3% positive impact of currency movements.
Conagra Brands Price, Consensus and EPS Surprise
Conagra Brands price-consensus-eps-surprise-chart | Conagra Brands Quote
Organic net sales decreased 2% year over year due to a 1.8% drop in volumes, which stemmed from the continuation of the slowdown in consumption. Also, the price/mix had a 0.2% adverse impact on organic sales as a result of elevated strategic investments. Our model suggested a year over year volume decline of 1.6% for the third quarter.
The adjusted gross profit increased 0.1% year over year to $870 million. The adjusted gross margin improved 52 basis points (bps) to 28.7%. This was due to higher productivity, which more than offset the adverse impacts of lower organic net sales, cost of goods sold inflation and unfavorable operating leverage.
Adjusted SG&A expenses, excluding advertising and promotional costs, increased 7.4% year over year to $286 million due to higher incentive compensation.
Adjusted EBITDA (including equity method investment earnings, and the pension and post-retirement non-service income) descended 5.3% year over year to $634 million, mainly led by lower adjusted operating profit.
Segmental Details
Grocery & Snacks: Quarterly net sales in the segment came in at $1.3 billion, up 3.4% year over year. Organic sales also increased 3.4% on a 4.2% rise in the price/mix and a 0.8% drop in volumes. During the quarter, CAG saw dollar share gains in staple and snacking categories like chili, pudding, microwave popcorn, seeds and canned meat.
Refrigerated & Frozen: Net sales and organic sales declined 8.1% year over year to $1.2 billion. Our model suggested a 4% decline in net sales and organic sales for the quarter under review. The price/mix fell 4.8%, with volumes down 3.3%. The company saw improvements in frozen sides, frozen breakfasts, frozen seafood and frozen single-serve meals.
International: Net sales advanced 4.6% year over year to $272 million, reflecting improved organic net sales (up 1%) and positive currency effects (3.6%). We expected sales growth of 5.5% for the segment. Organic sales growth was driven by the price/mix (which dipped 1.7%) and volumes (which rose 2.7% due to strength in the Mexico business).
Foodservice: Reported and organic sales declined 1% year over year to $273 million. The price/mix improved 3.8%, whereas volumes declined 4.8%.
Other Updates
The company exited the fiscal third quarter with cash and cash equivalents of $78.5 million, senior long-term debt (excluding current installments) of $7.5 billion, and total stockholders’ equity of $9.2 billion. Conagra paid out a dividend of 35 cents per share in the fiscal third quarter.
Guidance
For fiscal 2024, organic net sales are anticipated to decrease 1-2% year over year. The adjusted operating margin is expected to be 15.8%, slightly rising from the earlier mentioned 15.6%.
Management envisions an adjusted EPS of $2.60-$2.65. The company reported an adjusted EPS of $2.77 in fiscal 2023.
For fiscal 2024, the net leverage ratio is anticipated to be 3.44X. Capital expenditure is likely to be $425 million, interest expenses are expected at $435 million and the adjusted effective tax rate is forecast at 24%.
Shares of the company have rallied 11.8% in the past six months compared with the industry’s growth of 13.8%.
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Post Holdings (POST - Free Report) is a consumer-packaged goods holding company. It currently flaunts a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 52.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings suggests growth of 15.2% and 3.4%, respectively, from the year-ago reported numbers.
Celsius Holdings (CELH - Free Report) specializes in commercializing healthier, nutritional, functional foods, beverages and dietary supplements. The company currently carries a Zacks Rank #2 (Buy)-.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 41.6% each from the year-ago reported numbers. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.