Conagra Brands (CAG) reported mixed third-quarter results on March 21. The company’s adjusted third-quarter earnings for the period ending February 24 beat analysts’ estimate. Conagra Brands stock rose ~6% in the pre-market session.
Conagra Brands’ net sales marked strong double-digit growth, which reflected incremental sales from its recent acquisitions of Pinnacle Foods and Sandwich Bros. Currency volatility and divestitures remained a drag. As a result, Conagra Brands missed analysts’ sales estimate.
Conagra Brands’ organic sales rose 1.9% during the third quarter due to higher volumes and pricing. In comparison, General Mills (GIS), which posted better-than-expected third-quarter results on March 20, also reported better organic sales due to its improved pricing and mix.
The company’s adjusted gross margin fell by 115 basis points, which reflected increased input and transportation costs. Also, brand-building investments subdued the gross margins. Despite the weak gross margin, Conagra Brands’ adjusted operating margin expanded by 130 basis points due to the lower SG&A expense rate and higher pricing and mix.
Conagra Brands reported net sales of $2.7 billion in the third quarter, which increased 35.7% on a YoY (year-over-year) basis. However, the earnings missed analysts’ estimate of $2.8 billion. The company’s bottom line fell 16.4% YoY to $0.51, which reflected higher interest expenses and an increase in the outstanding share count. The adjusted EPS beat analysts’ estimate of $0.49.