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Conagra Down 12% in Three Months: Solid Bargain or Risky Bet
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Key Takeaways
CAG stock is down 11.9% in 3 months, trading below key moving averages and near its 52-week low.
Foodservice and International sales fell 6.1% and 17.6%, hurt by volume declines and FX headwinds.
Adjusted EPS is projected at $2.35 for fiscal 2025, down from $2.67, amid margin and cost pressures.
Conagra Brands, Inc. (CAG - Free Report) has seen its share price plummet 11.9% in three months compared with the industry’s 1.1% decline. This decline can be traced to broader market dynamics and specific challenges faced by the company. Investors are currently divided on whether the stock is set for further decline or on the verge of a recovery.
CAG Stock Past Three Months Performance
Image Source: Zacks Investment Research
CAG stock drove to its 52-week low of $21.81 yesterday, closing the trading session at $22.28. The stock is currently trading below key technical levels, including its 50 and 200-day moving averages, signaling continued bearish pressure.
What Is Dragging CAG Stock Down?
Conagra’s Foodservice segment continues to face headwinds amid broader industry challenges. In the third quarter of fiscal 2025, reported sales in this segment declined 6.1% year over year to $256 million. Organic sales fell 6.3%, caused by a 10% drop in volumes, reflecting persistent softness in commercial traffic due to ongoing macroeconomic pressures. This underperformance constrains Conagra’s ability to fully capitalize on growth opportunities within the foodservice channel.
The company’s exposure to international markets also makes it vulnerable to currency volatility. In the fiscal third quarter, the international segment experienced a 17.6% year-over-year decline in net sales to $224 million, with foreign exchange headwinds accounting for 8.5 percentage points of that drop.
In addition, cost inflation continues to weigh on profitability. With inflation hovering around 4% during the fiscal third quarter, unfavorable operating leverage compounded the pressure. As a result, adjusted gross profit declined 19.1% to $704 million and the adjusted gross margin narrowed 389 basis points to 24.8%. While Conagra expects modest margin improvement in the fiscal fourth quarter, it is unlikely to fully offset the prevailing cost challenges.
During the last earnings call, the company reaffirmed its fiscal 2025 outlook while acknowledging ongoing operational disruptions in the fiscal third quarter. For fiscal 2025, Conagra projects a 2% decline in organic net sales. Adjusted operating margin is expected to be 14.4%, down from 16% a year ago, while adjusted earnings per share (EPS) are forecasted to be $2.35 compared with $2.67 in the prior year.
Can CAG’s Strategy Uplift Performance?
Consumer preferences are constantly evolving and Conagra actively evaluates opportunities to reshape the portfolio for sustained growth and margin expansion. This includes ongoing investments in innovation, brand modernization and a strategic mix of acquisitions and value-accretive divestitures. Over the past decade, the company has significantly transformed its portfolio and recently resumed active reshaping by exiting low-growth businesses and strengthening its presence in key categories.
CAG’s broad portfolio across frozen, snacks and staples positions it to capitalize on multiple consumer trends while mitigating risks from individual category fluctuations. During the third quarter of fiscal 2025, the company emphasized continued strong consumer pull across its brands, despite temporary supply constraints. As inventory rebuilds and service levels improve, particularly in frozen, the company expects volumes to recover further in the coming quarters.
Unlocking CAG’s Valuation
Conagra currently trades at a forward 12-month price-to-earnings ratio of 9.47X. The figure is below the industry’s average of 16.06X, highlighting CAG as a potentially undervalued stock.
CAG P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
CAG’s Investment Analysis
Conagra faces notable challenges, including inflationary cost pressures, currency headwinds and underperformance in key segments like Foodservice and International. Combined with a downward earnings outlook and technical weakness near 52-week lows, the stock’s near-term prospects appear uncertain. For now, investors may consider exploring other opportunities. CAG currently carries a Zacks Rank #5 (Strong Sell).
NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings implies growth of 4.6% and 7.3%, respectively, from the year-ago number.
Oatly Group AB (OTLY - Free Report) , an oatmilk company, provides a range of plant-based dairy products made from oats. It presently has a Zacks Rank of 2 (Buy). OTLY delivered a trailing four-quarter earnings surprise of 25.1%, on average.
The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.7% and 65.8%, respectively, from the year-ago figures.
BRF S.A. (BRFS - Free Report) raises, produces and slaughters poultry and pork for the processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank #2. BRFS delivered a trailing four-quarter earnings surprise of 5.4%, on average.
The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year earnings implies growth of 11.1% from the prior-year levels.
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Conagra Down 12% in Three Months: Solid Bargain or Risky Bet
Key Takeaways
Conagra Brands, Inc. (CAG - Free Report) has seen its share price plummet 11.9% in three months compared with the industry’s 1.1% decline. This decline can be traced to broader market dynamics and specific challenges faced by the company. Investors are currently divided on whether the stock is set for further decline or on the verge of a recovery.
CAG Stock Past Three Months Performance
Image Source: Zacks Investment Research
CAG stock drove to its 52-week low of $21.81 yesterday, closing the trading session at $22.28. The stock is currently trading below key technical levels, including its 50 and 200-day moving averages, signaling continued bearish pressure.
What Is Dragging CAG Stock Down?
Conagra’s Foodservice segment continues to face headwinds amid broader industry challenges. In the third quarter of fiscal 2025, reported sales in this segment declined 6.1% year over year to $256 million. Organic sales fell 6.3%, caused by a 10% drop in volumes, reflecting persistent softness in commercial traffic due to ongoing macroeconomic pressures. This underperformance constrains Conagra’s ability to fully capitalize on growth opportunities within the foodservice channel.
The company’s exposure to international markets also makes it vulnerable to currency volatility. In the fiscal third quarter, the international segment experienced a 17.6% year-over-year decline in net sales to $224 million, with foreign exchange headwinds accounting for 8.5 percentage points of that drop.
In addition, cost inflation continues to weigh on profitability. With inflation hovering around 4% during the fiscal third quarter, unfavorable operating leverage compounded the pressure. As a result, adjusted gross profit declined 19.1% to $704 million and the adjusted gross margin narrowed 389 basis points to 24.8%. While Conagra expects modest margin improvement in the fiscal fourth quarter, it is unlikely to fully offset the prevailing cost challenges.
During the last earnings call, the company reaffirmed its fiscal 2025 outlook while acknowledging ongoing operational disruptions in the fiscal third quarter. For fiscal 2025, Conagra projects a 2% decline in organic net sales. Adjusted operating margin is expected to be 14.4%, down from 16% a year ago, while adjusted earnings per share (EPS) are forecasted to be $2.35 compared with $2.67 in the prior year.
Can CAG’s Strategy Uplift Performance?
Consumer preferences are constantly evolving and Conagra actively evaluates opportunities to reshape the portfolio for sustained growth and margin expansion. This includes ongoing investments in innovation, brand modernization and a strategic mix of acquisitions and value-accretive divestitures. Over the past decade, the company has significantly transformed its portfolio and recently resumed active reshaping by exiting low-growth businesses and strengthening its presence in key categories.
CAG’s broad portfolio across frozen, snacks and staples positions it to capitalize on multiple consumer trends while mitigating risks from individual category fluctuations. During the third quarter of fiscal 2025, the company emphasized continued strong consumer pull across its brands, despite temporary supply constraints. As inventory rebuilds and service levels improve, particularly in frozen, the company expects volumes to recover further in the coming quarters.
Unlocking CAG’s Valuation
Conagra currently trades at a forward 12-month price-to-earnings ratio of 9.47X. The figure is below the industry’s average of 16.06X, highlighting CAG as a potentially undervalued stock.
CAG P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
CAG’s Investment Analysis
Conagra faces notable challenges, including inflationary cost pressures, currency headwinds and underperformance in key segments like Foodservice and International. Combined with a downward earnings outlook and technical weakness near 52-week lows, the stock’s near-term prospects appear uncertain. For now, investors may consider exploring other opportunities. CAG currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Nomad Foods (NOMD - Free Report) , which manufactures frozen foods, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings implies growth of 4.6% and 7.3%, respectively, from the year-ago number.
Oatly Group AB (OTLY - Free Report) , an oatmilk company, provides a range of plant-based dairy products made from oats. It presently has a Zacks Rank of 2 (Buy). OTLY delivered a trailing four-quarter earnings surprise of 25.1%, on average.
The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.7% and 65.8%, respectively, from the year-ago figures.
BRF S.A. (BRFS - Free Report) raises, produces and slaughters poultry and pork for the processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank #2. BRFS delivered a trailing four-quarter earnings surprise of 5.4%, on average.
The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year earnings implies growth of 11.1% from the prior-year levels.