A month has gone by since the last earnings report for Conagra Brands (CAG Quick QuoteCAG - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Conagra Brands due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Conagra Brands before we dive into how investors and analysts have reacted as of late.

Conagra Q3 Earnings Miss Estimates Despite Organic Sales Growth

Conagra Brands reported third-quarter fiscal 2026 results, wherein the top and bottom lines declined year over year, and earnings missed the Zacks Consensus Estimate despite the company posting organic sales growth. 
Results reflected improving volume trends, particularly in frozen and snacks categories, partly offset by inflationary pressures, divestiture impacts and margin contraction. Conagra narrowed its guidance for fiscal 2026.

Conagra’s adjusted earnings per share (EPS) for the quarter were 39 cents, missing the Zacks Consensus Estimate of 40 cents. The bottom line dropped 23.5% year over year, primarily due to lower adjusted gross profit and continued cost inflation pressures.

Net sales decreased 1.9% year over year to $2,787.8 million, but came in slightly above the Zacks Consensus Estimate of $2,767 million. The decline reflected a 4.8% headwind from M&A, partly offset by a 2.4% increase in organic net sales and a 0.5% favorable currency impact. Organic net sales rose 2.4%, backed by a 1.9% improvement in price/mix and a 0.5% rise in volumes. Management highlighted gains in volume share across categories such as frozen meals, vegetables, snacks, hot cocoa, seeds and pudding. Our model suggested organic sales would increase 1.2% in the third quarter.

Adjusted gross profit declined 6.3% to $660 million, while adjusted gross margin contracted 112 basis points to 23.7%, as productivity gains were more than offset by inflation, unfavorable operating leverage and divestiture-related impacts. Our model projected adjusted gross margin contraction of about 160 basis points to 23.2%. Adjusted SG&A expenses increased 6.4% to $364 million, reflecting higher advertising and promotional investments. Adjusted EBITDA declined 14.9% to $437 million.

Decoding CAG’s Segmental Performance

Grocery & Snacks: Net sales declined 6.3% year over year to about $1.2 billion due to an 8.1% M&A headwind, partly offset by 1.8% organic growth. Organic sales benefited from a 4% price/mix increase, offset by a 2.2% volume decline. Adjusted operating profit fell 10.6% to $217 million. We had expected segment volumes to fall 2.4% while expecting a 2.8% pricing gain. 

Refrigerated & Frozen: Net sales increased 1.6% to $1.1 billion, driven by 3.6% organic growth and a 2% M&A drag. Organic growth was supported by a 3.9% volume increase, partially offset by a 0.3% decline in price/mix. Adjusted operating profit decreased 15.4% to $105 million.

International: Sales jumped 1.3% to $227 million, supported by favorable currency, partly offset by a 1.2% organic decline and a 4.3% adverse impact from M&A. Organic performance included a 0.8% price/mix gain and a 2% volume decline. Adjusted operating profit slipped 5.4% to $32 million.

Foodservice: Net sales rose 1.8% to $261 million, reflecting 3.6% organic growth and a 1.8% M&A headwind. Organic growth was driven by a 3.7% price/mix increase, with volumes down 0.1%. Adjusted operating profit declined 9.2% to $26 million.

What to Expect From CAG in FY26?

Conagra narrowed its fiscal 2026 outlook, now expecting organic net sales to be near the midpoint of its previously guided range of a 1% decline to 1% growth compared with fiscal 2025. The company anticipates adjusted operating margin to be near the high end of its earlier projection of approximately 11% to 11.5%, while adjusted EPS is expected to be around $1.70, which is at the low end of the prior $1.70-$1.85 range.

Adjusted equity earnings are now projected at roughly $140 million, lower than the earlier estimate of about $170 million. Management also expects free cash flow conversion of approximately 105% for the year. The outlook continues to factor in elevated cost inflation of around 7%, including tariff-related impacts, partially mitigated by productivity initiatives, pricing actions and supply-chain adjustments.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Conagra Brands has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Conagra Brands has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.