Analysts’ sales projection
Analysts expect Conagra Brands (CAG) to sustain its sales momentum in fiscal 3Q18. Conagra Brands’ top line returned to growth during fiscal 2Q18 due to hurricane-related demand and acquired brands’ strong performance. The company’s top line was impacted negatively in the past due to its planned brand divestitures and industry-wide weak demand for packaged food.
For fiscal 3Q18, analysts expect Conagra Brands to report sales of $2.0 billion—up ~1% on a YoY (year-over-year) basis. The absence of hurricane-related sales will likely cause a sequential decline in the sales growth rate.
Factors that could impact Conagra’s 3Q18 sales
Conagra’s focus on portfolio optimization through the divestiture of underperforming non-core brands and the acquisition of fast-growing brands will likely support its top-line growth in fiscal 3Q18. The company’s acquired brands include Duke’s, BIGS, Angie’s BOOMCHICKAPOP, and Frontera. The brands will likely have a healthy performance and contribute meaningfully to Conagra’s top-line growth rate.
Favorable currency rates and price restructuring are also expected to support Conagra’s sales growth.
Weak demand for packaged foods amid consumers’ shift toward healthy and fresh food and the company’s brand investments, including slotting fees, will likely remain a drag.
A focus on innovation-driven new product launches, a strong performance from acquired brands, and price restructuring are driving food manufacturers’ top-line performance. Kellogg’s (K) top line improved during the last reported quarter due to the improved performance from its recently acquired brands including Parati and RXBAR.
Hershey’s (HSY) top line declined on a YoY basis during the last reported quarter. New innovation-based product launches like Hershey’s Cookie Layer Crunch Bar generated improved sales.