What Awaits Conagra Brands (CAG) as It Queues for Q1 Earnings?
Conagra Brands, Inc. CAG is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 earnings on Oct 5. The Zacks Consensus Estimate for revenues is pegged at roughly $3 billion, suggesting a rise of 1.4% from the prior-year quarter’s reported figure.
The consensus mark for quarterly earnings has remained unchanged in the past 30 days at 60 cents per share, implying growth of 5.3% from the year-ago quarter’s reported figure. Conagra Brands has a trailing four-quarter earnings surprise of 13.6%, on average.
Factors to Note
Conagra has been gaining from its frozen and snacks categories. On its fourth-quarter fiscal 2023 earnings call, management stated that the frozen and snacks categories improved 9% and 8%, respectively, over the past four years. Together, these categories form about 70% of the company’s domestic retail dollar sales.
Growth in the frozen category reflects the strength of CAG’s brands and the effective execution of the Conagra Way playbook. In fiscal 2023 (a year of considerable pricing), seven out of the company’s top 10 frozen product categories either held or increased unit share. Moving to snacks, Conagra’s two biggest snacking platforms — meat snacks and microwave popcorn — witnessed increased unit share in fiscal 2023. Management expects fiscal 2024 results to benefit from the company’s investments in innovation in these categories. This bodes well for the quarter under review.
Conagra’s efficient pricing initiatives have been another driver, offering respite amid cost headwinds. Incidentally, the company has been encountering cost inflation for a while now, though pressure has been easing of late, with inflation-justified pricing actions being a major help. Management expects the net cost of goods sold inflation of nearly 3% in fiscal 2024. It also expects increased investments in A&P as well as SG&A in fiscal 2024 to facilitate innovation.
While these costs raise concerns over margins, pricing actions and brand strength are likely to aid results in the quarter to be reported. Our model suggests a pricing gain of 8.8% in the first quarter of fiscal 2024. We expect organic sales growth of 1.4% in the quarter.
Conagra Brands Price, Consensus and EPS Surprise
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Conagra Brands price-consensus-eps-surprise-chart | Conagra Brands Quote
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Conagra Brands this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Conagra Brands carries a Zacks Rank #3 and has an Earnings ESP of +1.73%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the correct combination to beat on earnings this time.
Flowers Foods FLO currently has an Earnings ESP of +1.54% and carries a Zacks Rank #2. The company is likely to register top-line growth when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for FLO’s quarterly revenues is pegged at $1.2 billion, indicating a rise of 5.2% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Flowers Foods’ quarterly earnings per share of 28 cents suggests a drop of 6.7% from the year-ago quarter’s levels. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
Colgate-Palmolive Company CL currently has an Earnings ESP of +0.20% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports third-quarter 2023 results. The Zacks Consensus Estimate for Colgate-Palmolive’s quarterly revenues is pegged at $4.8 billion, suggesting growth of 8.2% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the last 30 days at 80 cents per share, which indicates 8.1% growth from the year-ago quarter's reported number. CL delivered an earnings surprise of 1.7%, on average, in the trailing four quarters.
Hershey HSY currently has an Earnings ESP of +2.21% and a Zacks Rank #3. The company is likely to register a top-and-bottom-line increase when it reports third-quarter 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $2.48 suggests a 14.3% rise from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Hershey’s quarterly revenues is pegged at about $3 billion, calling for growth of 9.2% from the figure reported in the prior-year quarter. HSY has a trailing four-quarter earnings surprise of 8.9%, on average.
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Hershey Company (The) (HSY) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
Conagra Brands (CAG) : Free Stock Analysis Report
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
