Conagra Brands Lowers Fiscal 2025 EPS and Margin Outlook

Conagra Brands, Inc. has revised its fiscal 2025 outlook, projecting lower adjusted EPS and operating margins amid inflation and unfavorable FX impact. The report highlights mixed performance in net income and net sales.

Date: 19-12-2024

AI Rating: 4

In the latest report, Conagra Brands, Inc. (CAG) has revised its fiscal 2025 guidance, resulting in notable changes that could impact investor sentiment. Adjusted EPS has been revised down to a range of $2.45 to $2.50, a decline from the previous range of $2.60 to $2.65. This downward adjustment could signal to investors that the company is facing challenges in maintaining prior levels of profitability.

The adjusted operating margin is also projected lower at approximately 14.8%, compared to the earlier estimate of 15.6% to 15.8%. This decline in margin suggests that increasing production costs and other internal factors might be taking a toll on profitability. Consequently, this could affect the overall valuation of the company as lower margins often lead to a re-evaluation of growth potential by investors.

Regarding revenue, Conagra Brands anticipates organic net sales to be near the midpoint of a decline of 1.5% to flat, indicating a struggle to achieve growth in a competitive environment. This contrasts with the previous quarter where organic net sales did show a slight increase of 0.3%. The decrease in net sales, which fell 0.4% to $3.2 billion, further emphasizes the challenges faced in generating top-line growth.

In terms of net income, the report notes a slight decrease to $284.5 million compared to $286.2 million the previous year, with reported earnings per share down 1.7%. Although earnings per share did slightly beat expectations at $0.70 compared to the anticipated $0.67, the ongoing trend of declining performance could result in future downgrades from analysts.

Overall, the report highlights significant external challenges such as higher inflation rates and unfavorable foreign exchange impacts that could pressure the business in the second half of the fiscal year. These variables could deter investor confidence and ultimately affect Conagra's stock price moving forward.

Stocks: CAG