Conagra's stock turns down as consumer-spending slowdown leads to sales miss
By Tomi Kilgore
Food brands company beats profit expectations and reiterates full-year outlook
Shares of Conagra Brands Inc. fell toward a more than three-year low Thursday, after the food brands company reported a fiscal first-quarter profit that rose above expectations, while sales fell a bit short amid weakness in its refrigerated and frozen foods business.
The company (CAG), with brands including Duncan Hines, Birds Eye, Slim Jim and Hunt's, swung to net income for the quarter to Aug. 27 of $319.7 million, or 67 cents a share, from a loss of $77.5 million, or 16 cents a share, in the year-ago period.
Excluding nonrecurring items, adjusted earnings per share rose 15% to 66 cents, above the FactSet consensus of 60 cents.
Sales inched less than 0.1% lower to $2.904 billion, below the FactSet consensus of $2.951 billion. Price and mix increased 6.3%, but volume dropped 6.6%, "largely due to industry-wide slowdown in consumption and recent consumer behavior shifts," the company said.
The stock initially jumped as much as 2.3% after the results were released, before reversing course to be down 1.1% in premarket trading. That put the stock to open around the lowest closing price seen since March 2020.
Within Conagra's business segments, grocery and snacks sales increased 1.2% to $1.2 billion, as price/mix rose 5.6% while volume fell 4.4%. Refrigerated and frozen sales decreased 4.6% to $1.2 billion, as 5.9% rise in price/mix was offset by a 10.5% fall in volume.
International sales rose 11.4% to $260 million, with price/mix up 7.9% and volume up 0.3%.
Cost of goods sold declined 4.7% to $2.08 billion, helping boost gross margin by 3.54 percentage points to 28.3%.
For fiscal 2024, the company reiterated its adjusted EPS guidance range of between $2.70 and $2.75, which surrounds the current FactSet consensus of $2.71.
Conagra's stock has dropped 21.2% over the past three months through Wednesday, while the Consumer Staples Select Sector SPDR ETF XLP has shed 8.4% and the S&P 500 index SPX has lost 4.1%.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
10-05-23 0805ET
Copyright (c) 2023 Dow Jones & Company, Inc.-
What’s the Difference Between the CPI and PCE Indexes?
-
Micron Earnings: Great Guidance but Stock Now Looks Fairly Valued
-
August PCE Report Forecasts Show More Good News on Inflation
-
AI Stocks May Be Down, but Don’t Count Them Out
-
4 Stocks to Buy as the Fed Cuts Interest Rates
-
Markets Brief: The Uncertain Path to Neutral Interest Rates
-
What’s Happening in the Markets This Week
-
Where Top Stock Fund Managers Are Looking Next After the Fed Rate Cut
-
Our Top Pick for Investing in US Renewable Energy
-
How to Measure a Stock’s Uncertainty
-
How to Determine Whether a Stock Is Cheap, Expensive, or Fairly Valued
-
Why a Company’s Management and Capital Allocation Matter
-
How to Determine What a Stock Is Worth
-
How to Measure a Company’s Competitive Advantage
-
How to Think Like a Stock Analyst
-
How GLP-1 Drugs Like Ozempic Are Boosting Biopharma Stocks