Will ConAgra Continue to Deliver Positive Earnings Growth?
What Can You Expect from ConAgra’s Upcoming Fiscal 2Q16 Results?
Earnings ahead of estimates
ConAgra Foods (CAG) has been either surpassing or in line with estimates since the last five quarters. The company also showed positive earnings growth in the past two quarters. In fiscal 1Q16, it reported EPS (earnings per share) of $0.45, beating estimates by 13%. It even showed a YoY (year-over-year) growth of 15% in fiscal 1Q16. The EPS consensus estimate for fiscal 2Q16 is $0.61. Earnings will show no growth if the company reports earnings per share in line with estimates in the second quarter. In our post-earnings series on ConAgra, we’ll see if the company managed to beat the estimates or was in line with them in the second quarter.
A company’s EPS represents the portion of its profits allocated to each outstanding share of common stock. The analysts that follow ConAgra are expecting it to grow earnings at an average annual rate of 6.5% over the next five years. This year, analysts are forecasting a 2.3% rise in earnings over last year. Analysts expect earnings growth next year of 7.2% over this year’s forecast earnings.
Management’s remarks
Sean Connolly, chief executive officer of ConAgra Foods, noted, “We are off to a strong start in fiscal 2016. While early days, we are making good progress against our plan to drive margin improvement within a more focused portfolio. In the near-term, we expect to grow profits modestly in fiscal 2016 across the Consumer Foods and Commercial Foods segments by building on the stronger foundations established last fiscal year, with an emphasis on improving price or mix and implementing relentless cost discipline.”
In the press release, management also mentioned that the organization emphasizes bringing long-term top and bottom line improvement. Its strategy of rigorous portfolio segmentation work and improved innovation capabilities should benefit the company’s top line over time. The company is also developing aggressive cost savings plan to reduce selling, general, and administrative expenses (or SG&A) and enhance trade efficiency. ConAgra Foods also said it was confidence in its ability to unlock long-term value through its plan to become a leaner company.
Competitors
ConAgra Foods’ main peers in the industry are Campbell Soup (CPB), Mead Johnson (MJN), and Mondelez (MDLZ). They recorded EPS of $0.95, $0.8, and $0.42, respectively, for their last reported quarters. Also, the First Trust Consumer Staples AlphaDEX Fund (FXG) and the Guggenheim Defensive Equity ETF (DEF) invest 2.5% and 1.1%, respectively, of their portfolios in CPB.
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