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Is ConAgra (CAG) Poised to Beat Earnings Estimates in Q1?


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ConAgra Foods, Inc. (CAG - Analyst Report) is scheduled to report its first-quarter fiscal 2017 figures before the opening bell on Sep 29, 2016.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

ConAgra is undergoing rigorous structural changes, by divesting its less profitable businesses and acquiring new brands, for boosting its revenues and margins.

In Jul 2016, the company received approximately $488 million by divesting its JM Swank and Spicetec Flavors & Seasonings business. As stated by ConAgra, the cash proceeds would be utilized to fund new capital deployment programs, innovation projects or meaningful acquisitions. These initiatives are expected to drive the company’s top and bottom line in the quarter to be reported.

Higher demand for organic and natural frozen food products is also estimated to increase sales of ConAgra’s Lamb Weston business in the quarter. Also, the company’s ongoing “efficiency plan’ is expected to bring down costs in the fiscal first quarter.

ConAgra’s margins are anticipated to improve on the back of the above-mentioned factors and lower the prices of energy resource in the market. However, certain headwinds, such as lower consumers’ brand loyalty or strategic success of any major business rival, might weigh over revenues and margins in the to-be-reported quarter.

On grounds of the existing market conditions, the company anticipates to accrue earnings per share growth within the range of mid to high teens in first-quarter fiscal 2017.

Earnings Whispers

Our proven model does not conclusively show that ConAgra is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below.

Zacks ESP: ConAgra currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate stand at of 48 cents.

CONAGRA FOODS Price and EPS Surprise


Zacks Rank: ConAgra carries a Zacks Rank #3. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

Nu Skin Enterprises Inc. (NUS - Snapshot Report) , which has an Earnings ESP of 1.21% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. (GIS - Analyst Report) with an Earnings ESP of +1.15% and a Zacks Rank #3.

Mondelez International, Inc. (MDLZ - Analyst Report) with an Earnings ESP of +2.33% and a Zacks Rank #3.

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