Conagra Shares Down on Lower Revenues; Earnings Surpass Estimates

Following the release of fiscal Q4 results, shares of Conagra Brands (CAG) plummeted 5.4% in Tuesday’s trading session on 16.7% decrease in net sales. However, the processed and packaged foods manufacturer was able to surpass the Street’s expectations.

Quarterly adjusted earnings came in at $0.54 per share, which surpassed expectations of $0.52 per share. It compares unfavorably with $0.75 per share reported in the last year’s quarter.

Conagra reported revenues of $2.74 billion and surpassed consensus estimates of $2.71 billion. (See Conagra stock chart on TipRanks)

Meanwhile, the company’s board of directors have authorised a 14% hike to annualized dividend rate, beginning with the dividend payable on September 2, 2021.

President and CEO of Conagra Sean Connolly said, “The underlying strength of our business and our continued investments to further support our brands give me confidence that we have a long runway of growth and shareholder value creation ahead of us.”

For fiscal 2022, Conagra expects net sales to remain flat. Also, adjusted operating margin is anticipated to be around 16%. Adjusted EPS is expected to be nearly $2.50.

Following the earnings results announcement, Jefferies analyst Robert Dickerson reiterated a Buy rating on the stock with a price target of $40 (17.7% upside potential).

The analyst said, “With investors expecting a guide-down, valuation low, the dividend raised, and 2H earnings still in line with prior company expectations, there could be some support for the stock on a down day today.”

Overall, the stock has a Moderate Buy consensus based on 2 Buys and 3 Holds. The average Conagra price target of $39.40 implies 16% upside potential from current levels.

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