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Company Performance - Conagra Brands reported quarterly earnings of $0.56 per share, missing the Zacks Consensus Estimate of $0.59 per share, and down from $0.61 per share a year ago, representing an earnings surprise of -5.08% [1] - The company posted revenues of $2.78 billion for the quarter ended May 2025, missing the Zacks Consensus Estimate by 2.18%, and down from $2.91 billion year-over-year [2] - Over the last four quarters, Conagra Brands has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance - Conagra Brands shares have declined approximately 26.6% since the beginning of the year, contrasting with the S&P 500's gain of 6.5% [3] - The current Zacks Rank for Conagra Brands is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $2.72 billion, and for the current fiscal year, it is $2.19 on revenues of $11.64 billion [7] - The outlook for the Food - Miscellaneous industry, where Conagra Brands operates, is currently in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [8]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [CEO Perspective & Strategic Focus](index=1&type=section&id=CEO%20Perspective%20%26%20Strategic%20Focus) Fiscal 2025 was challenging due to inflation and supply, while fiscal 2026 strategy focuses on volume growth, supply chain, and cost management - Fiscal 2025 performance was impacted by **higher-than-expected inflation**, foreign exchange headwinds, and supply constraints[4](index=4&type=chunk) - The strategic focus for fiscal 2026 includes investing in **frozen and snacks**, prioritizing **volume strength**, improving supply chain resiliency, and disciplined cost management[4](index=4&type=chunk) [Q4 & Full-Year FY2025 Key Results](index=1&type=section&id=Q4%20%26%20Full-Year%20FY2025%20Key%20Results) Conagra's Q4 and full-year FY2025 financial results showed declines in net sales and adjusted EPS, driven by lower organic sales, alongside cautious FY2026 guidance Q4 Fiscal 2025 Financial Highlights | Metric | Amount (USD) | Change | | :--- | :--- | :--- | | Reported Net Sales | $2.8 billion | -4.3% | | Organic Net Sales | - | -3.5% | | Reported Operating Margin | 11.5% | - | | Adjusted Operating Margin | 13.8% | - | | Reported Diluted EPS | $0.53 | - | | Adjusted EPS | $0.56 | -8.2% | Full-Year Fiscal 2025 Financial Highlights | Metric | Amount (USD) | Change | | :--- | :--- | :--- | | Reported Net Sales | $11.6 billion | -3.6% | | Organic Net Sales | - | -2.9% | | Reported Operating Margin | 11.8% | +467 bps | | Adjusted Operating Margin | 14.1% | -188 bps | | Reported Diluted EPS | $2.40 | +233.3% | | Adjusted EPS | $2.30 | -13.9% | - The **3.5% decrease in Q4 organic net sales** was driven by a **1.0% negative impact from price/mix** and a **2.5% decrease in volume**[7](index=7&type=chunk) [Detailed Financial Analysis](index=3&type=section&id=Detailed%20Financial%20Analysis) [Total Company Performance Analysis (Q4 FY2025)](index=3&type=section&id=Total%20Company%20Performance%20Analysis%20(Q4%20FY2025)) Q4 FY2025 net sales decreased 4.3% to $2.8 billion, with gross profit down 12.1% and adjusted gross profit down 10.7%, while SG&A expenses declined 17.2% - Q4 gross profit decreased **12.1% to $707 million**, with adjusted gross profit down **10.7% to $717 million**, primarily due to lower net sales and cost inflation[8](index=8&type=chunk) - Q4 SG&A expenses decreased by **17.2% to $333 million**, primarily due to lower incentive compensation[9](index=9&type=chunk) - Net interest expense decreased by **2.8% to $102 million** in the quarter, driven by a reduction in total debt[10](index=10&type=chunk) - Q4 net income attributable to Conagra Brands was **$256 million ($0.53 per diluted share)**, with adjusted net income at **$270 million ($0.56 per diluted share)**[11](index=11&type=chunk) [Segment Performance (Q4 FY2025)](index=3&type=section&id=Segment%20Performance%20(Q4%20FY2025)) In Q4, most segments saw sales declines, including Grocery & Snacks and Refrigerated & Frozen, while the International segment was a bright spot with organic net sales growth and increased operating profit Q4 FY2025 Segment Performance | Segment | Net Sales | Net Sales Change | Organic Sales Change | Adjusted Operating Profit | Adj. OP Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Grocery & Snacks | $1.2B | -2.1% | -3.3% | $226M | -11.7% | | Refrigerated & Frozen | $1.1B | -4.4% | -4.4% | $171M | -10.1% | | International | $230M | -13.8% | +0.8% | $35M | +22.7% | | Foodservice | $280M | -4.0% | -4.3% | $32M | -20.8% | - The International segment's reported net sales decrease of **13.8%** was primarily due to unfavorable impacts from **M&A (-7.3%)** and **foreign exchange (-7.3%)**, masking a **0.8% increase in organic net sales**[20](index=20&type=chunk)[29](index=29&type=chunk) - The Foodservice segment's organic sales decline was driven by a significant **7.6% volume decrease**, partially offset by a **3.3% price/mix increase**[22](index=22&type=chunk) [Financial Position and Capital Allocation](index=5&type=section&id=Financial%20Position%20and%20Capital%20Allocation) [Cash Flow and Debt Management](index=5&type=section&id=Cash%20Flow%20and%20Debt%20Management) For FY2025, Conagra generated $1.7 billion in operating cash flow and $1.3 billion in free cash flow, while reducing net debt by 4.4% to $8.0 billion FY2025 Cash Flow Summary | Metric | FY2025 (USD) | FY2024 (USD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1.7 billion | $2.0 billion | | Capital Expenditures | $389 million | $388 million | | Free Cash Flow | $1.3 billion | $1.6 billion | | Dividends Paid | $669 million | $659 million | - Net debt at the end of fiscal 2025 was **$8.0 billion**, representing a **4.4% reduction** from the prior year[31](index=31&type=chunk) - The company's net leverage ratio (Net Debt to Adjusted EBITDA) was **3.6x** at the end of the fiscal year[31](index=31&type=chunk)[69](index=69&type=chunk) [Dividend Information](index=5&type=section&id=Dividend%20Information) Conagra paid a $0.35 per share dividend in Q4 and approved an identical quarterly dividend, maintaining its commitment to shareholder returns - A dividend of **$0.35 per share** was paid during the fourth quarter[27](index=27&type=chunk) - The Board of Directors approved a subsequent quarterly dividend of **$0.35 per share**, payable on August 28, 2025[32](index=32&type=chunk) [Fiscal Year 2026 Outlook](index=7&type=section&id=Fiscal%20Year%202026%20Outlook) [FY2026 Guidance](index=7&type=section&id=FY2026%20Guidance) Conagra's FY2026 guidance projects organic net sales growth between -1% and 1%, with expected declines in adjusted operating margin and adjusted EPS ($1.70-$1.85) Fiscal 2026 Guidance | Metric | Guidance | | :--- | :--- | | Organic Net Sales Growth | (1)% to 1% | | Adjusted Operating Margin | ~11.0% to ~11.5% | | Adjusted EPS | $1.70 to $1.85 | | Interest Expense | ~$400MM | | Capital Expenditures | ~$450MM | | Free Cash Flow Conversion | ~90% | | Net Leverage Ratio | ~3.85x | - The fiscal 2026 guidance includes an expected **$0.05 benefit to adjusted EPS** from a 53rd week[37](index=37&type=chunk) [Key Assumptions and Headwinds](index=7&type=section&id=Key%20Assumptions%20and%20Headwinds) The FY2026 outlook assumes continued elevated inflation and macroeconomic uncertainty, with total COGS inflation projected at approximately 7%, including tariff impacts - Guidance anticipates **core inflation** to be approximately **4%** in fiscal 2026[33](index=33&type=chunk) - The company expects an approximate **3% increase in COGS** from U.S. tariffs on imported tin plate steel and aluminum[33](index=33&type=chunk) - Total expected **cost of goods sold inflation** is approximately **7%** for fiscal 2026[33](index=33&type=chunk) [Financial Statements](index=14&type=section&id=Financial%20Statements) [Consolidated Statements of Operations](index=14&type=section&id=Consolidated%20Statements%20of%20Operations) The income statement shows FY2025 net sales decreased 3.6% to $11.6 billion, while operating profit and net income significantly increased due to the absence of prior year impairment charges Consolidated Statements of Operations (Full Year, in millions USD) | (in millions USD) | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net sales | $11,612.8 | $12,050.9 | | Gross profit | $3,003.5 | $3,333.4 | | Operating profit | $1,364.6 | $852.8 | | Net income attributable to Conagra Brands, Inc. | $1,152.4 | $347.2 | | Diluted EPS | $2.40 | $0.72 | [Consolidated Balance Sheets](index=16&type=section&id=Consolidated%20Balance%20Sheets) As of May 25, 2025, Conagra's balance sheet shows total assets of $20.93 billion, total liabilities of $12.00 billion, and increased stockholders' equity Consolidated Balance Sheet Highlights (in millions USD) | Account (in millions USD) | May 25, 2025 | May 26, 2024 | | :--- | :--- | :--- | | Total current assets | $3,071.0 | $3,149.5 | | Total assets | $20,933.9 | $20,862.3 | | Total current liabilities | $4,317.0 | $3,241.8 | | Senior long-term debt | $6,234.1 | $7,492.6 | | Total liabilities | $12,001.2 | $12,351.0 | | Total stockholders' equity | $8,932.7 | $8,511.3 | [Consolidated Statements of Cash Flows](index=17&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For FY2025, net cash from operating activities was $1.69 billion, decreasing from prior year, with significant cash used in investing and financing activities, including debt repayments and dividends Consolidated Statement of Cash Flows (Full Year, in millions USD) | Account (in millions USD) | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net cash flows from operating activities | $1,691.9 | $2,015.6 | | Net cash flows from investing activities | ($542.2) | ($375.0) | | Net cash flows from financing activities | ($1,158.3) | ($1,656.7) | | Net change in cash and cash equivalents | ($9.7) | ($15.6) | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=19&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Reconciliation of Organic Net Sales](index=19&type=section&id=Reconciliation%20of%20Organic%20Net%20Sales) This section reconciles reported net sales to organic net sales, showing a 3.6% decrease in reported sales and a 2.9% decrease in organic sales for FY2025, with International as the only segment with positive organic growth FY25 Organic Net Sales Growth vs. Reported Net Sales Growth (%) | Segment | Reported Net Sales Growth (%) | Organic Net Sales Growth (%) | | :--- | :--- | :--- | | Grocery & Snacks | -1.2% | -2.0% | | Refrigerated & Frozen | -4.2% | -4.2% | | International | -11.3% | +0.5% | | Foodservice | -4.7% | -4.8% | | **Total Conagra Brands** | **-3.6%** | **-2.9%** | [Reconciliation of Adjusted Operating Profit](index=20&type=section&id=Reconciliation%20of%20Adjusted%20Operating%20Profit) Reported operating profit is adjusted for non-recurring items to derive adjusted operating profit, which for FY2025 was $1.63 billion, a 15.0% decrease, with adjusted operating margin contracting to 14.1% FY25 Adjusted Operating Profit vs. Reported Operating Profit (in millions USD) | Metric (in millions USD) | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Reported Operating Profit | $1,364.6 | $852.8 | +60.0% | | Adjusted Operating Profit | $1,634.5 | $1,922.7 | -15.0% | | Reported Operating Margin | 11.8% | 7.1% | +467 bps | | Adjusted Operating Margin | 14.1% | 16.0% | -188 bps | [Reconciliation of Adjusted Net Income and EPS](index=23&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income%20and%20EPS) This reconciliation adjusts reported net income and EPS, showing FY2025 reported diluted EPS at $2.40 (up significantly due to prior year impairment absence), while adjusted diluted EPS decreased 13.9% to $2.30 FY25 Adjusted EPS vs. Reported EPS (USD) | Metric (USD) | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Reported Diluted EPS | $2.40 | $0.72 | +233.3% | | Adjusted Diluted EPS | $2.30 | $2.67 | -13.9% | [Other Reconciliations (EBITDA, Free Cash Flow, Net Debt)](index=25&type=section&id=Other%20Reconciliations%20(EBITDA%2C%20Free%20Cash%20Flow%2C%20Net%20Debt)) This section details key non-GAAP metrics for FY2025, including Adjusted EBITDA of $2.22 billion (down 10.5%), Free Cash Flow of $1.30 billion (down 20.0%), and a Net Debt to Adjusted EBITDA ratio of 3.60x FY25 Key Non-GAAP Metrics (Millions USD) | Metric (Millions USD) | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $2,224.6M | $2,484.2M | -10.5% | | Free Cash Flow | $1,302.6M | $1,627.5M | -20.0% | | Net Debt | $7,999.6M | $8,363.6M | -4.4% | - The **Net Debt to Adjusted EBITDA ratio** for fiscal 2025 was **3.60x**[69](index=69&type=chunk)[70](index=70&type=chunk)

FY25 Performance - FY25 innovation launches generated over $300 million in retail sales[14] - FY25 innovation launches saw a 27% dollar growth compared to FY24 launches[15] - FY25 innovation launches experienced a 36% velocity improvement compared to FY24 launches[15] - Conagra's share of volume sales sold on promotion in Q2 FY25 reached 31%[20] - Conagra's domestic retail organic volume consumption grew by 0.7% in Q2 FY25[25] - 67% of Conagra's portfolio held or gained volume share in Q2 FY25[28] - Net debt reduced by $364 million year-over-year, reaching $8 billion in Q4 FY25[78] FY26 Outlook - FY26 organic net sales are projected to grow between -1% and +1%[83] - FY26 adjusted operating margin is expected to be approximately 110% to 115%[83] - FY26 adjusted EPS is forecasted to be in the range of $170 to $185[83] - Net M&A is expected to subtract approximately $540 million from reported net sales in FY26, while the 53rd week is projected to add approximately $200 million[87]

Core Insights - Conagra Brands, Inc. reported a decrease in net sales for both the fourth quarter and the full fiscal year 2025, with a 4.3% decline in Q4 to $2.8 billion and a 3.6% decline for the full year to $11.6 billion [4][9][14] - The company faced challenges such as higher inflation, foreign exchange headwinds, and supply constraints, but remains committed to its long-term value creation strategy [3][27] - The CEO emphasized a focus on investing in high-potential areas like frozen and snacks, while managing costs and enhancing supply chain resilience [3] Financial Performance - In Q4, gross profit decreased by 12.1% to $707 million, with an adjusted gross profit decrease of 10.7% to $717 million [5] - Selling, general, and administrative expenses (SG&A) decreased by 17.2% to $333 million, primarily due to lower incentive compensation [6] - Net income attributable to Conagra Brands was $256 million, or $0.53 per diluted share, with adjusted net income of $270 million, or $0.56 per diluted share [7] Segment Performance - The Grocery & Snacks segment saw a 2.1% decrease in net sales to $1.2 billion, while operating profit increased by 19.6% to $210 million [11][12] - The Refrigerated & Frozen segment reported a 4.4% decrease in net sales to $1.1 billion, with operating profit at $127 million [13] - The International segment experienced a significant 13.8% decrease in net sales to $230 million, but operating profit increased by 35.6% to $35 million [17][18] Outlook and Guidance - For fiscal 2026, the company anticipates organic net sales growth between -1% to 1%, with adjusted operating margins expected between 11.0% and 11.5% [14][32] - The company expects continued elevated cost of goods sold inflation, estimating a total inflation of approximately 7% due to various factors including tariffs [27] - The guidance includes an adjusted EPS forecast between $1.70 and $1.85 [14][32] Cash Flow and Debt - For the full fiscal year, Conagra generated $1.7 billion in net cash flows from operating activities, down from $2.0 billion in the prior year [24] - The company ended the year with net debt of $8.0 billion, reflecting a 4.4% reduction from the previous year [25] - Dividends paid increased by 1.5% to $669 million [24][26]

Core Viewpoint - The significant decline in stock prices of Conagra Brands and Campbell's Company presents a potential buying opportunity for patient investors despite the challenges faced by the packaged food industry [3][20]. Industry Overview - The packaged food industry is experiencing a severe slowdown due to pullbacks in consumer spending and inflation, which have particularly impacted packaged food companies [5]. - A shift in consumer behavior towards healthier options poses a significant challenge for the industry, especially for companies focused on frozen and processed meals [6]. Company Performance - Conagra and Campbell's stocks have both dropped over 25% year to date, reaching their lowest levels in over a decade, resulting in dividend yields of 6.8% and 5.1%, respectively [1][2][16]. - Both companies have faced difficulties due to poor acquisition decisions, with Conagra's acquisition of Pinnacle Foods for $10.9 billion and Campbell's acquisition of Snyder's-Lance for $6.1 billion being particularly criticized [11][12][13]. Financial Metrics - Conagra's free cash flow (FCF) per share is $3.02, while its dividend per share is $1.40; Campbell's FCF per share is $2.41 against a dividend of $1.52, indicating that both companies can support their dividends despite weakening balance sheets [18]. - In terms of valuations, Campbell's has a price-to-FCF ratio of 12.8 and a forward price-to-earnings (P/E) ratio of 10.5, while Conagra has a price-to-FCF ratio of 6.8 and a forward P/E of 8.3, showing that both stocks are significantly discounted compared to their historical averages [19]. Regulatory Environment - Regulatory pressures, such as the U.S. Department of Health and Human Services' measures to phase out synthetic dyes, add to the challenges faced by the industry but could lead to long-term benefits [7][9]. - Conagra announced plans to remove synthetic colors from its U.S. frozen product portfolio by the end of 2025, aligning with industry trends towards healthier ingredients [8].

Group 1 - Conagra Brands is set to announce its fiscal fourth-quarter earnings on July 10, 2025, with analysts predicting earnings of $0.61 per share on revenue of $2.88 billion, which is approximately unchanged year-over-year [2] - The company has a current market capitalization of $10 billion and reported revenue of $12 billion over the previous twelve months, with operating profits of $481 million and net income of $329 million [3] - Snack volumes increased by 4% in Q3, driven by meat snacks and popcorn, indicating a positive trend in consumption as the industry shifts towards healthier options [2] Group 2 - Historical data shows that Conagra has recorded 18 earnings data points over the last five years, with 7 positive and 11 negative one-day returns, resulting in positive returns approximately 39% of the time [6] - The median of the 7 positive returns is 1.5%, while the median of the 11 negative returns is -2.0%, suggesting a mixed performance post-earnings [6] - The correlation between short-term and medium-term returns following earnings can provide insights for traders, particularly if the 1D and 5D returns exhibit high correlation [7]

Core Viewpoint - Conagra Brands, Inc. is set to report its fourth-quarter earnings on July 10, with a focus on maintaining profitability amid declining revenue forecasts and market dynamics, while offering an attractive dividend yield for investors [1] Financial Performance - Analysts predict Conagra Brands will report quarterly earnings of 61 cents per share, consistent with the previous year, and quarterly revenue of $2.88 billion, down from $2.91 billion a year earlier [2] - Morgan Stanley analyst Megan Alexander has maintained an Equal Weight rating on Conagra Brands and reduced the price target from $27 to $22 [2] Dividend Insights - Conagra Brands currently offers an annual dividend yield of 6.67%, translating to a quarterly dividend of 35 cents per share, or $1.40 annually [3] - To achieve a monthly income of $500 from dividends, an investment of approximately $89,963 or around 4,286 shares is required, while a more modest goal of $100 per month would need about $17,988 or 857 shares [3][4] Stock Price and Yield Dynamics - The dividend yield is calculated by dividing the annual dividend payment by the stock's current price, which can fluctuate based on changes in stock price and dividend payments [4][5] - Conagra Brands' shares fell 0.7% to close at $20.99 recently, indicating potential impacts on the dividend yield [6]

Core Viewpoint - Conagra Brands (CAG) is expected to report a decline in quarterly earnings and revenues, with analysts adjusting their estimates downward over the past month [1][2]. Financial Performance - Quarterly earnings are predicted to be $0.59 per share, a decrease of 3.3% year-over-year [1]. - Revenues are forecasted at $2.85 billion, reflecting a year-over-year decrease of 1.8% [1]. Analyst Revisions - The consensus EPS estimate has been adjusted downward by 2% over the past 30 days, indicating a reassessment by covering analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and stock price performance [3]. Sales Projections - 'Sales- Grocery & Snacks' are expected to reach $1.18 billion, showing a year-over-year increase of 0.7% [5]. - 'Sales- Foodservice' is forecasted at $282.84 million, indicating a decline of 2.9% from the prior year [5]. - 'Sales- International' is projected to be $228.22 million, reflecting a significant decrease of 14.5% year-over-year [5]. Operating Profit Estimates - 'Adjusted Operating Profit (loss)- Grocery & Snacks' is estimated at $256.07 million, slightly up from $255.40 million a year ago [8]. - 'Adjusted Operating Profit (loss)- Refrigerated & Frozen' is projected at $171.73 million, down from $189.70 million in the same quarter last year [8]. - 'Adjusted Operating Profit (loss)- Foodservice' is expected to be $38.03 million, down from $39.70 million year-over-year [9]. - 'Adjusted Operating Profit (loss)- International' is estimated at $29.74 million, slightly up from $28.90 million a year ago [9]. Stock Performance - Over the past month, shares of Conagra Brands have declined by 5.7%, contrasting with a 5.2% increase in the Zacks S&P 500 composite [10]. - Conagra Brands currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near future [10].

Core Insights - Conagra Brands, Inc. (CAG) is expected to report a decline in both revenue and earnings for the fourth quarter of fiscal 2025, with earnings per share (EPS) estimated at 59 cents, reflecting a 3.3% decrease year-over-year [1][8] - The consensus estimate for quarterly revenues is projected at $2.9 billion, indicating a 1.8% decline from the previous year [1][8] - For fiscal 2025, the overall earnings guidance suggests a decline of 12.7% in EPS to $2.33, with organic net sales growth expected to decrease by 2% [1][4] Financial Performance - The adjusted operating margin for fiscal 2025 is projected at 14.4%, down from previous levels, with adjusted earnings forecasted at $2.35 per share, a decrease from $2.67 in fiscal 2024 [4] - The trailing four-quarter negative earnings surprise for CAG averages almost -0.1% [1] Cost Pressures - Persistent cost inflation, particularly in input and protein costs, continues to impact margin performance, with an expected adjusted gross margin contraction of 170 basis points year-over-year [2] - Rising selling, general and administrative (SG&A) expenses, including advertising and promotional spending, are further squeezing profitability [2] Market Conditions - The Foodservice segment is under pressure due to weaker commercial traffic and a sluggish recovery in out-of-home dining, reflecting broader industry challenges [3] - Currency volatility due to international exposure adds additional pressure on the company's performance [3]