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Pinnacle Foods Acquisition to Drive Conagra Brands’ Q3 Sales

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Analyst estimates

Analysts expect Conagra Brands (CAG) to report solid sales in the third quarter of fiscal 2019. Analysts expect Conagra Brands to post net sales of $2.8 billion, which implies year-over-year growth of ~39%. Analysts expect Conagra Brands’ top line to benefit from its recent acquisition of Pinnacle Foods, which is projected to contribute most of the growth.

Meanwhile, innovation-led products and brand investments are expected to support sales growth. However, currency volatility could remain a drag on net sales growth. Also, the strategic sale of the Trenton facility and Canadian Del Monte business is likely to hurt the company’s net sales growth rate.

Conagra Brands’ organic sales are likely to benefit from improved pricing and transfer of shipments from the second quarter to the third quarter.

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The top lines of the company’s peers are also gaining from incremental sales from their recent acquisitions. General Mills’ (GIS) top line is projected to benefit from its Blue Buffalo acquisition. Meanwhile, J.M. Smucker (SJM) topped analysts’ sales estimate in the fiscal third quarter, thanks to the 5% contribution from its recent acquisition. Moreover, the acquisition of Snyder’s-Lance and Pacific Foods added ~26% to Campbell Soup’s (CPB) second-quarter sales. Also, Kellogg’s (K) top line is benefitting from the consolidation of Multipro’s operations.

Revisiting previous quarter

Conagra Brands’ top line increased 9.7% on a year-over-year basis in the second quarter. However, net sales missed analysts’ estimate in the previous quarter despite a 13.2% contribution from recent acquisitions. The sales of the Trenton facility and Canadian Del Monte business remained a drag. Also, adverse currency rates and weakness in organic sales limited the top-line growth rate.

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