19 Jun

Conagra Brands: Acquisition Could Boost Q4 Sales

WRITTEN BY Amit Singh

Net sales estimate

Analysts expect Conagra Brands (CAG) to report net sales of $2.7 billion in the fourth quarter, which implies 35.6% growth YoY (year-over-year). Analysts expect Conagra Brands’ revenues to continue to gain from its Pinnacle Foods acquisition. The acquisition will likely contribute to most of the growth in the company’s net sales.

However, currency volatility and divestitures are expected to hurt. Conagra Brands missed analysts’ sales estimate in the past three quarters. Negative currency rates and planned divestitures remained a drag.

Conagra Brands: Acquisition Could Boost Q4 Sales

Conagra Brands’ underlying sales are expected to improve on a YoY basis, which reflects higher volumes in the frozen and snacks segments. Higher pricing and a favorable mix are expected to support the company’s organic sales. Conagra Brands’ organic sales face tough YoY comparisons in the fourth quarter, which could limit the growth rate. Investments in brand building with retailers could remain a drag.  Management expects to register 1.7% growth in organic sales during the fourth quarter.

For Hershey (HSY) and Mondelēz (MDLZ), improved volumes and pricing drove their organic sales during the last reported quarter. Analysts expect General Mills’ (GIS) fourth-quarter net sales to benefit from incremental sales from the Blue Buffalo acquisition. Price restructuring and the product mix are expected to support the company’s underlying sales.

Last quarter

Conagra Brands’ top line rose 35.7% on a YoY basis during the previous quarter due to its Pinnacle Foods acquisition. Pinnacle Foods contributed 34.3% to the net sales growth rate. The organic sales increased 1.9% during the last reported quarter due to growth in volumes and pricing. Despite strong growth, the net sales fell short of analysts’ estimate, which reflected negative currency rates.

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