What to Expect From Conagra Brands’ Q3 Results on Wednesday?

Conagra Brands (NYSE:CAG) shares rose by 5% intra-day today, following the announcement of fiscal Q3/24 results that exceeded market expectations.

The company announced earnings per share of $0.69, surpassing the predicted $0.64. Its quarterly revenue reached $3.03 billion, exceeding the forecast of $3.01 billion. Although the adjusted operating margin dipped slightly to 16.4% from the previous year's 16.9%, it was still higher than the expected 15.7%.

Looking forward, Conagra adjusted its full-year 2024 earnings per share guidance to a range of $2.60 to $2.65, compared to the analysts' predictions of $2.60. Furthermore, the company anticipates a 1-2% drop in organic net sales.

ConAgra Foods (NYSE:CAG) released its first-quarter results, and the numbers were a mixed bag. While the earnings per share (EPS) stood at $0.66, surpassing the anticipated $0.60 according to analysts, the company's quarterly revenue was $2.9 billion, slightly below the expected $2.96 billion.

Grocery & Snacks net sales reached $1.20 billion, showing a modest 1.2% increase compared to the same period last year but falling just short of the estimated $1.21 billion. Meanwhile, Refrigerated & Frozen net sales came in at $1.15 billion, marking a 4.6% decline year-on-year and also missing the estimated $1.22 billion.

Regarding future prospects, ConAgra Foods projects that its full-year 2024 EPS will range from $2.70 to $2.75, which is slightly above the Street estimate of $2.71.

RBC Capital analysts provided their perspective on Conagra Brands (NYSE:CAG) in anticipation of the Q3 earnings announcement on Wednesday. They mentioned that the company's demand patterns are stable but less dynamic, with reduced elasticities, which is comparable to other packaged food companies.

The analysts expect Q3 organic sales growth of 5.8% (vs. Street estimate of 6.9%) and EPS of $0.63 (vs. Street’s $0.64).

As a reminder, the company confirmed fiscal 2023 guidance in late February. Overall, the analysts expect another pricing-driven quarter with volumes remaining in focus given the company’s more muted trends in tracked channels but acknowledge some noise in tracked channels (coming off allocation and supply chain disruptions a year ago).

RBC Capital analysts provided their outlook on Conagra Brands, Inc. (NYSE:CAG) ahead of the upcoming Q2 results on Jan 5. The analysts expect organic growth of 7.4%, in line with the Street estimate, and EPS of $0.65, compared to the Street estimate of $0.66.

The analysts expect another strong quarter for the company and expect first-half performance will be enough for it to be in a position to raise guidance.

The company continues to see strong demand with lower elasticities, similar to the rest of the packaged food space. The company’s sales are up 10.6% in IRI for the Nov quarter, up from 9% in Aug. Growth continues to be mainly pricing driven but volumes have remained consistent--down high-single-digits with pricing up high teens-low twenties.

Deutsche Bank analysts provided a preview of Conagra Brands, Inc.(NYSE:CAG) upcoming Q4 earnings, expected to be reported on July 14.

According to the analysts, the backdrop is clouded by lingering inflation and worsening macroeconomic factors. However, the analysts noted that similar to other food peers, tracked channel consumption remains elevated at a 3-year CAGR of 5.7% (vs. 5.6% in Q3).

As such, the analysts believe the company should be positioned to at least achieve its implied organic growth guidance of approximately 7%.

The analysts kept their EPS estimate unchanged at $0.65, compared to the implied Q4 guidance of approximately $0.64 and Street estimate of $0.63.

Conagra Brands, Inc. (NYSE:CAG) reported its Q3 results, with EPS of $0.58 coming in above the consensus estimate of $0.57. Revenue was $2.91 billion, compared to the consensus estimate of $2.84 billion.

Analysts at Deutsche Bank provided their views on the company following the earnings announcement. They expect the company's results (top-line beat, gross margin/OI miss) and reduced 2022 guidance to be met with modest disappointment—reinforcing concerns regarding the company's exposure to cost inflation, alongside potential skepticism with respect to its future pricing power and demand resiliency.

In other words, the analysts expect the market to focus more on the updated outlook for adjusted EPS of $2.35 (vs. $2.50 prior)—and thus on management's below-consensus outlook for Q4—and less on the company's "pro forma" estimate of $2.65.