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Conagra Brands: What to Expect in Q4


Jun. 19 2019, Updated 1:12 p.m. ET

Conagra Brands

Conagra Brands (CAG) is scheduled to announce its fourth-quarter results on June 27. We expect Conagra Brands’ revenues to continue to grow at a stellar double-digit growth rate due to incremental sales from the Pinnacle Foods acquisition. The company’s organic sales are expected to improve due to strength in the frozen and snacks category. However, tough YoY (year-over-year) comparisons could limit the company’s growth.

Conagra Brands’ gross profit margins could stay under pressure due to brand building investments with retailers, inflation in input costs, and higher packaging and transportation costs. However, the lower SG&A expense rate could support the company’s operating margin.

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We expect Conagra Brands’ adjusted earnings to continue to decline on a YoY basis. Increased interest expenses and the higher outstanding share count are expected to drag the company’s earnings down. Higher interest expenses are also hurting peers’ bottom lines including General Mills (GIS), Campbell Soup (CPB), and J.M. Smucker (SJM).

Strong gains

So far, packaged food makers’ shares have registered strong growth in 2019. Conagra Brands stock has increased 35.7% on a YTD (year-to-date) basis as of June 18. General Mills, Campbell Soup, and J.M. Smucker have risen 34.7%, 23.9%, and 29.0% YTD.


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