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Why Did Conagra Brands Plunge Nearly 9% Yesterday?

Story Highlights

Conagra Brands barely skirted a difficult quarter by reporting mixed results. Record high inflation continues to haunt consumer goods stocks.

Shares of Conagra Brands (NYSE: CAG) plunged 8.9% yesterday after the American consumer packaged goods company posted mixed fourth-quarter fiscal 2022 results.

Moreover, the company’s guidance for FY23 fell short of Wall Street’s expectations. CAG stock ended the day down 7.2% at $33.15 on July 14.

CAG Results in Detail

Conagra Brands’ quarterly net sales rose 6.2% year-over-year to $2.91 billion. Although the company’s net sales grew across each segment, they were not enough to beat analysts’ estimates of $2.93 billion. Meanwhile, driven by healthy inflation-driven pricing actions, organic sales leaped 6.8% compared to the same period last year.

On the bright side, Q4 adjusted earnings of $0.65 per share beat analysts’ estimates by two cents. CAG reported adjusted earnings of $0.54 per share in Q4 FY21.

For the full year fiscal 2022, net sales rose 3.1% annually to $11.54 billion and adjusted earnings fell 10.6% to $2.36 per share.

CAG Forecasts Sluggish FY23 Outlook

For fiscal 2023, Conagra Brands expects inflationary pressures to continue to affect its performance. The company has also communicated additional pricing actions to mitigate the effects.

Looking ahead, the company expects FY23 organic net sales to grow by 4% to 5% annually and adjusted earnings per share (EPS) to grow by 1% to 5%.

Hold Rating for CAG

With two Hold ratings, CAG stock has a Hold consensus rating. The average Conagra Brands price target of $35 implies 5.6% upside potential to current levels. The stock has remained almost stable in value so far this year.

CAG Stock Likely to Outperform

According to TipRanks’ Smart Score, Conagra Brands has a score of eight, indicating that the stock is likely to outperform the market. Bloggers are bullish on the stock, and hedge funds have increased their holdings of CAG stock by 74,100 shares in the last quarter. Additionally, retail investors have increased their exposure to CAG stock by 1.3% over the last seven days.

Concluding Notes

Conagra is implementing good steps to mitigate the inflationary pressures. With the consumer price index (CPI) for June 2022 recording another high of 9.1%, the pressure is expected to continue on consumer goods stocks.

Disclosure

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