We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Conagra Brands, Inc. (CAG - Free Report) delivered encouraging growth in the Foodservice segment in the first quarter of fiscal 2027, supported by higher organic sales, improved volumes and productivity gains. The business recorded growth in both operating profit and operating margin despite continued inflationary pressures. Stronger sales performance and cost efficiencies helped offset higher input costs, highlighting the segment's ability to deliver improved profitability in a challenging operating environment.
Foodservice net sales increased 3.2% year over year to $272.9 million in the fiscal first quarter, while organic net sales advanced 3.3%. The segment marked the fifth consecutive quarter of organic sales growth, reflecting sustained positive sales trends. Volume increased 2.5%, while favorable price/mix contributed 0.8 percentage points to organic sales growth. However, approximately 150 basis points of volume growth came from the accelerated timing of specific customer orders, which occurred in the third quarter of the previous fiscal year.
This improvement in sales contributed to stronger profitability. Foodservice operating profit and adjusted operating profit increased 11.4% year over year to $30.9 million. Adjusted operating margin expanded 83 basis points to 11.3%. Higher organic net sales and productivity improvements more than offset the negative impact of cost-of-goods-sold inflation, allowing the segment to deliver growth in both profit and margin in the fiscal quarter.
Conagra Brands' Foodservice segment continues to benefit from organic sales growth and productivity improvements despite inflationary pressures. However, the contribution from accelerated customer orders to quarterly volume growth remains an important consideration. Going forward, sustaining profit momentum will depend on continued sales growth and productivity gains offsetting higher costs. The latest quarterly performance demonstrates positive progress in Foodservice profitability, with sales growth and cost efficiencies providing support.
Shares of this Zacks Rank #3 (Hold) company have fallen 8.8% over the past month, underperforming the industry and the broader Consumer Staples sector, which declined 5% and 2.5%, respectively. CAG also underperformed the S&P 500 index, which gained 3.1% over the same period.
CAG Stock's Past Month Performance
Image Source: Zacks Investment Research
Is CAG a Value Play Stock?
Conagra Brands currently trades at a forward 12-month P/E ratio of 9.2, which is down from the industry average of 13.79 and the sector average of 16.82. This valuation places the stock at a modest discount relative to comparable peers and the sector overall.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2. Mama's Creations delivered a trailing four-quarter earnings surprise of 121.7%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30.3% and 66.7%, respectively, from the year-ago figures.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States. It presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales indicates growth of 3.7% from the year-ago numbers.
View the Zacks #1 Rank List
Image: Bigstock
Can Conagra Brands Sustain Its Foodservice Profit Momentum?
Key Takeaways
Conagra Brands, Inc. (CAG - Free Report) delivered encouraging growth in the Foodservice segment in the first quarter of fiscal 2027, supported by higher organic sales, improved volumes and productivity gains. The business recorded growth in both operating profit and operating margin despite continued inflationary pressures. Stronger sales performance and cost efficiencies helped offset higher input costs, highlighting the segment's ability to deliver improved profitability in a challenging operating environment.
Foodservice net sales increased 3.2% year over year to $272.9 million in the fiscal first quarter, while organic net sales advanced 3.3%. The segment marked the fifth consecutive quarter of organic sales growth, reflecting sustained positive sales trends. Volume increased 2.5%, while favorable price/mix contributed 0.8 percentage points to organic sales growth. However, approximately 150 basis points of volume growth came from the accelerated timing of specific customer orders, which occurred in the third quarter of the previous fiscal year.
This improvement in sales contributed to stronger profitability. Foodservice operating profit and adjusted operating profit increased 11.4% year over year to $30.9 million. Adjusted operating margin expanded 83 basis points to 11.3%. Higher organic net sales and productivity improvements more than offset the negative impact of cost-of-goods-sold inflation, allowing the segment to deliver growth in both profit and margin in the fiscal quarter.
Conagra Brands' Foodservice segment continues to benefit from organic sales growth and productivity improvements despite inflationary pressures. However, the contribution from accelerated customer orders to quarterly volume growth remains an important consideration. Going forward, sustaining profit momentum will depend on continued sales growth and productivity gains offsetting higher costs. The latest quarterly performance demonstrates positive progress in Foodservice profitability, with sales growth and cost efficiencies providing support.
Conagra Brands’ Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have fallen 8.8% over the past month, underperforming the industry and the broader Consumer Staples sector, which declined 5% and 2.5%, respectively. CAG also underperformed the S&P 500 index, which gained 3.1% over the same period.
CAG Stock's Past Month Performance
Image Source: Zacks Investment Research
Is CAG a Value Play Stock?
Conagra Brands currently trades at a forward 12-month P/E ratio of 9.2, which is down from the industry average of 13.79 and the sector average of 16.82. This valuation places the stock at a modest discount relative to comparable peers and the sector overall.
CAG P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2. Mama's Creations delivered a trailing four-quarter earnings surprise of 121.7%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30.3% and 66.7%, respectively, from the year-ago figures.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States. It presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales indicates growth of 3.7% from the year-ago numbers.