Why Is Conagra Brands (CAG) Up 6.4% Since Last Earnings Report?

Conagra Brands Q4 Earnings Beat Estimates, Sales Rise 3.6% Y/Y

Conagra Brands reported fourth-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals. Adjusted earnings per share (EPS) for the quarter were 47 cents, beating the Zacks Consensus Estimate of 46 cents. The bottom line dropped 16.1% year over year.

Net sales increased 3.6% year over year to $2,882.1 million, slightly exceeding the Zacks Consensus Estimate of $2,876 million. The increase reflected a 7.7% benefit from the 53rd week and a 0.5% favorable foreign exchange impact, partly offset by a 4.6% headwind from M&A activity. 

Organic net sales remained flat, supported by a 1.6% increase in price/mix, which offset a 1.6% decline in volume, with the company gaining volume share in categories including frozen single-serve meals, frozen multi-serve meals, frozen vegetables, meat snacks, seeds and pudding. 

Adjusted gross profit declined 1.6% to $706 million, while adjusted gross margin contracted 130 basis points to 24.5%, as productivity initiatives, approximately $6 million in tariff refunds and the benefit of the 53rd week were more than offset by cost inflation and unfavorable operating leverage. Adjusted SG&A expenses, which include advertising and promotional expenses, increased 11% to $369 million, due to elevated incentive compensation and the impact of the 53rd week. Adjusted EBITDA declined 11% to $484.4 million.

Decoding CAG’s Segmental Performance

Grocery & Snacks: Net sales rose 0.3% year over year to about $1.2 billion, reflecting a 7.8% benefit from the 53rd week, partly offset by an 8% M&A headwind, while organic net sales grew 0.5%. Organic growth was driven by a 4% increase in price/mix, partially offset by a 3.5% decline in volume. Adjusted operating profit fell 4.1% to $216 million

Refrigerated & Frozen: Net sales increased 5.3% to $1.2 billion, supported by a 7.6% benefit from the 53rd week despite a 1.8% M&A headwind and a 0.5% decline in organic net sales. Organic sales reflected a 0.8% decline in price/mix, partially offset by a 0.3% increase in volume. Adjusted operating profit decreased 18.5% to $139 million.

International: Sales jumped 6.3% to $244 million, benefiting from 6% favorable foreign exchange and a 7.6% contribution from the 53rd week, partially offset by a 4.9% M&A impact and a 2.4% decline in organic net sales. Organic sales were affected by a 3% decline in volume, partly mitigated by a 0.6% increase in price/mix. Adjusted operating profit slipped 7.1% to $33 million.

Foodservice: Net sales rose 8.1% to $302 million, driven by a 7.7% benefit from the 53rd week and 1.8% organic growth, partially offset by a 1.4% M&A headwind. Organic growth was supported by a 2.6% increase in price/mix despite a 0.8% decline in volume. Adjusted operating profit declined 6.9% to $29 million.

What to Expect From CAG in FY27?

For fiscal 2027, the company expects organic net sales to decline 1-3%, adjusted operating margin to be in the range of 10-10.5%, and adjusted EPS of $1.40-$1.50. The outlook also assumes equity earnings of approximately $140 million and free cash flow conversion of more than 90%.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -20.88% due to these changes.

VGM Scores

At this time, Conagra Brands has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Conagra Brands has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Conagra Brands is part of the Zacks Food - Miscellaneous industry. Over the past month, General Mills (GIS), a stock from the same industry, has gained 0.5%. The company reported its results for the quarter ended May 2026 more than a month ago.

General Mills reported revenues of $4.61 billion in the last reported quarter, representing a year-over-year change of +1.2%. EPS of $0.95 for the same period compares with $0.74 a year ago.

For the current quarter, General Mills is expected to post earnings of $0.73 per share, indicating a change of -15.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for General Mills. Also, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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