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Should Conagra Brands, Inc.'s (NYSE:CAG) Recent Earnings Decline Worry You?

Simply Wall St

Measuring Conagra Brands, Inc.'s (NYSE:CAG) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CAG's recent performance announced on 25 August 2019 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for Conagra Brands

Was CAG weak performance lately part of a long-term decline?

CAG's trailing twelve-month earnings (from 25 August 2019) of US$676m has declined by -18% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 24%, indicating the rate at which CAG is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the whole industry is facing the same headwind.

NYSE:CAG Income Statement, December 1st 2019

In terms of returns from investment, Conagra Brands has fallen short of achieving a 20% return on equity (ROE), recording 9.0% instead. Furthermore, its return on assets (ROA) of 5.1% is below the US Food industry of 6.3%, indicating Conagra Brands's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Conagra Brands’s debt level, has declined over the past 3 years from 9.6% to 8.7%.

What does this mean?

Though Conagra Brands's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Conagra Brands to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CAG’s future growth? Take a look at our free research report of analyst consensus for CAG’s outlook.
  2. Financial Health: Are CAG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 25 August 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.