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Can Conagra Brands Beat Estimates in Fiscal 4Q17?

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Part 3
Can Conagra Brands Beat Estimates in Fiscal 4Q17? PART 3 OF 5

Why Conagra’s Sales Is projected to Decline in Fiscal 4Q17

Analysts project a decline

Analysts covering Conagra Brands (CAG) expect the company to post sales of $1.9 billion in fiscal 4Q17, which would be a fall of 34% YoY (year-over-year). Conagra is restructuring its portfolio of brands by shedding underperforming ones, and this process will likely impact volumes negatively in the near-term.

Meanwhile, the industry-wide slowdown will likely pressure sales growth even further. For fiscal 2017, analysts expect Conagra to report revenues of $7.8 billion.

Why Conagra’s Sales Is projected to Decline in Fiscal 4Q17

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By comparison, analysts expect General Mills (GIS) to report a decline in sales for its next quarter. McCormick & Company (MKC) has been bucking the current industry trend, however, and is expected to post 3.5% YoY growth in its top line in its upcoming fiscal 2Q17 results.

Conagra’s strategic initiatives

Conagra is taking strategic measures to build a high-quality revenue base that includes price optimization, lower promotions, and shedding underperforming brands. The company is reinventing its product portfolio through innovation and mergers and acquisitions, and this effort has resulted in a strong product pipeline scheduled to hit markets early next fiscal year.

Conagra is also focusing on its premium upmarket segment through its new Power Bowls. The company recently completed the acquisition of Thanasi Brands, which will add to its new premium segment brands and should attract young and affluent customers.

All these measures are likely to improve the company’s top line growth, though in the near term, its sales are still expected to remain muted, given the currently soft macroenvironment. The company projected its fiscal 2017 sales (excluding the impact of divestitures and foreign exchange) to decline more than 5%.

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