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What to Expect from Conagra’s Fiscal 1Q18 Results

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What to Expect from Conagra’s Fiscal 1Q18 Results PART 1 OF 5

What to Expect from Conagra’s Fiscal 1Q18 Results

Slow demand to affect financials

Investors are dumping food stocks as weak consumer demand and retailers reducing inventory are expected to affect the financials of these companies. Moreover, General Mills’ (GIS) sluggish performance during the recently reported fiscal 1Q18 further highlighted the fact that industry woes are here to stay and aren’t likely to abate in the near term. After the earnings report, most of the food manufacturing companies witnessed their share prices fall in the past two days.

As for Conagra Brands (CAG), the company’s sales are likely to remain low as soft demand and portfolio restructuring initiatives are expected to result in lower sales. Besides, increased investment to support innovation, lower volumes, and currency headwinds are projected to restrict the company’s EPS growth.

What to Expect from Conagra’s Fiscal 1Q18 Results

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However, Conagra’s new product launches and healthy performances of recently acquired brands are expected to benefit its top line. Meanwhile, stringent cost-cutting measures and productivity initiatives are likely to boost margins, though at a slower rate, in fiscal 2018.

Stock performance

Conagra stock is down about 15.5% on a YTD (year-to-date) basis as of September 21, 2017. In comparison, shares of other food manufacturing companies have also fallen and are trading in the red on a YTD basis.

Campbell Soup (CPB), General Mills, J.M. Smucker (SJM), Kellogg (K), and Kraft Heinz (KHC) are down by 24.5%, 16.3%, 17.3%, 13.3%, and 9.5%, respectively, during the same period. Moreover, the recent selloff triggered by General Mills’ tepid first-quarter results also dragged down the share prices of McCormick (MKC), Hershey (HSY), and Tyson Foods (TSN), which until now have performed well and have generated stable results.

The food stocks have underperformed the S&P 500 Index (SPX-INDEX), which is up by 11.7% year-to-date.

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