Conagra Brands, Inc. CAG remains committed to employee protection, as part of which it announced plans to offer another round of cash bonuses to eligible workers. The company said that it will pay incremental cash bonus worth $7 million to employees at each of its production and distribution center in the United States, Canada and Mexico.
Prior to this, the company announced cash bonuses for all eligible employees toward the end of March. Management is impressed with its workforce, especially the supply chain workers at its food production and distribution centers. Further, these moves reflect the company’s focus on rewarding its employees as they are working hard amid the coronavirus-led crisis to cater to the growing demand for food.
In its third-quarter fiscal 2020 earnings release (on Mar 31), management stated that the fourth-quarter performance (to that date) will see solid shipments and consumption in the domestic retail business. This also helped the company counter softness in its foodservice business amid the pandemic. Further, demand for foodservice products reduced in the wake of coronavirus and the company said that it expects foodservice organic net sales to slump 50-60% in the fiscal fourth quarter.
Despite the uncertain situation, management expects to exceed its previously-projected sales and profit targets for fiscal 2020, given an undisturbed supply-chain network. Consequently, net sales growth is expected to come above the higher end of the previously-projected 10-10.5% range. Organic sales growth is likely to exceed the higher end of the expected flat to up 0.5% range. Further, management projects the adjusted operating margin to be greater than the higher end of the 15.8-16.2% band. Adjusted earnings for the fiscal year are now anticipated to surpass the previously-projected range of $2.00-$2.07 per share.
We note that many other food companies like Kellogg K, TreeHouse Foods THS and Kraft Heinz KHC, among others, are benefiting from rising food demand and stockpiling trends amid the COVID-19-led crisis. Meanwhile, Conagra is focused on employee safety measures. Toward this end, the company has implemented social distancing practices, undertaken temperature screening and sanitization measures, provided masks and shields at facilities and allocated shifts to ensure the safety of its workers.
Such employee protection measures and the focus on catering to the burgeoning food demand are likely to keep working well for Conagra, Shares of this Zacks Rank #2 (Buy) company have rallied 13.8% in the past three months against the industry’s decline of 10.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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