Conagra Stock Drops 8.5% on Weak Fiscal Q1 2019, Tepid Outlook



Quarter in brief

Conagra Brands (CAG) disappointed with its results for the first quarter of fiscal 2019, which it released on September 27. The company’s top and bottom lines for the 13-week period that ended on August 26 fell short of analysts’ expectations.

Although the company managed to sustain its sales and earnings growth momentum in the quarter, its low rate of growth failed to impress. Conagra Brands’ profit margins also remained weak and contracted on both a YoY (year-over-year) and a sequential basis.

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The company’s weak sales and margin guidance for the fiscal 2019 second quarter also didn’t sit well with investors. Conagra Brands expects its organic sales to stay flat or mark a slight fall YoY in the second quarter of fiscal 2019. Meanwhile, soft sales, a shift in its marketing strategy, and higher packaging, transportation, and commodities costs are expected to take a toll on its margins.

Following the company’s weaker-than-expected results and soft guidance for its next quarter, its stock fell 8.5% to $32.98 on September 27.

Stock performance

Conagra Brands stock has underperformed the S&P 500 Index so far this year, and including yesterday’s fall, it now joins the long list of packaged food companies that have marked double-digit decreases in their prices.

Shares of Conagra Brands are down 12.5% YTD (year-to-date) as of September 27. Meanwhile, the Kraft Heinz Company (KHC), General Mills (GIS), the Campbell Soup Company (CPB), and the J.M. Smucker Company (SJM) have registered YTD falls of 29.2%, 27.4%, 23.4%, and 17.6%, respectively.

On the contrary, the S&P 500 Index has risen 9.0% during the same period.


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