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Consumer staples company Conagra Brands Inc. (NYSE: CAG), which owns popular brands like Marie Callender, Reddi-wip, and Slim Jim, has been able to beat headwinds like inflation through prudent pricing practices and continuous innovation. The company will report its third-quarter earnings next week.
Over the past twelve months, Conagra’s stock has mostly traded sideways — most notably hitting record highs in January. Although CAG has pulled back since then, it continues to trade above its long-term average. If the stock’s flat historical performance is any indication, it is unlikely to make such gains that will result in significant value in the near future.
Savings
Those who bought the stock today may be disappointed. A better way to approach a stock is to monitor and wait for a suitable entry point. On the plus side, it’s cheap and offers a high dividend yield of 3.6%, which is higher than the S&P 500 average.
In a sign that 2023 will be a better year than 2022, Conagra executives are predicting a double-digit increase in full-year earnings, marking an improvement from last year when earnings fell by about 10%.
Q3 Report Because
The company is set to report results for the third quarter of 2023 on Wednesday morning, April 5. Analysts estimate that earnings, adjusted for non-recurring items, rose 10% from a year ago to $0.64 per share in the February quarter. The average estimate for net sales is $3.09 billion, which is up 6%.
From Conagra Brands’ Q2 2023 earnings call:
“Although gross margin may vary from quarter to quarter due to a number of internal and external factors, the strategic pricing actions we have successfully implemented, combined with moderate inflation and a strong brand, we are positioned to recover and maintain a healthy gross margin going forward. , inflation remains elevated in many areas, and we continue to closely monitor costs as we have in the past. We will continue to take price action in line with the necessary inflation.
Finance
In the second quarter, continued strong performance by the grocery and frozen food segments increased total sales by 8% to $3.3 billion, which also exceeded Wall Street projections. With the exception of international sales, which decreased by 1%, all operating segments registered revenue growth. As a result, adjusted profit rose 28% to $0.81 per share and came in above estimates – the fourth consecutive earnings beat. After ending the first half on an optimistic note, management raised sales and profits for the year.
CAG gained strength ahead of earnings and the uptrend continued this week, but the stock closed Thursday’s session lower.
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