Conagra Brands Stock Falls 6% Due to Lowered Guidance

Conagra Brands' shares dipped almost 6% following disappointing guidance for fiscal 2025. The company expects organic sales to decline by 2%, impacting investor confidence and overall stock performance.

Date: 19-02-2025

AI Rating: 4

Significant Loss in Market Value

Conagra Brands (NYSE: CAG) experienced a notable decline of nearly 6% in stock value after announcing significantly lowered guidance for fiscal 2025. This sell-off occurred on a day when the broader S&P 500 index saw a positive rise of 0.2%, highlighting a specific weakness in Conagra's outlook compared to overall market performance.

Organic Sales and EPS Guidance Update

Conagra projects a decline in organic sales by approximately 2% from the prior fiscal year, a sharp downgrade from the earlier forecast of a 0.7% to 0.8% decrease. This development raises concerns about the company's growth trajectory. Additionally, the adjusted earnings per share (EPS) forecast has been revised down to approximately $2.35, whereas previous expectations ranged between $2.45 and $2.50. The EPS for the previous fiscal year was $2.67, indicating a downward trend in profitability.

Profitability Concerns Amid Operational Challenges

The lowered guidance stems from “customer service interruptions,” linked to supply constraints notably affecting key frozen meal product categories like chicken and frozen vegetables. Poor foreign exchange rates are also anticipated to negatively influence results. These factors contribute to an overall erosion in profitability and a troubling outlook for revenue, which further dampens investor enthusiasm.

Long-term Strategies and CEO's Outlook

Despite the challenges, CEO Sean Connolly expressed a degree of optimism by noting strong demand throughout the year and highlighting investments in infrastructure and partnerships that could position Conagra for future success. However, investors may be skeptical of this strategy without more immediate measures to address current operational headwinds.

This report ultimately indicates a deteriorating outlook, challenging investor confidence and likely reinforcing negative market sentiment around Conagra Brands.

Stocks: CAG