Conagra Brands (CAG) Troubled by Slowdown in Consumption Trends

Core Insights - Conagra Brands, Inc. is facing challenging industry trends, including a slowdown in consumption, which is reflected in its fourth-quarter fiscal 2024 results and guidance for fiscal 2025 [1][3][6] - The company has been making significant brand-building investments, which are essential for long-term growth but may negatively impact short-term profitability [1][5] Financial Performance - The Zacks Consensus Estimate for the current quarter and fiscal year earnings per share has decreased by one cent to 59 cents and $2.62, respectively [2] - The consensus estimate for the next fiscal EPS has also been revised down from $2.73 to $2.70 [2] - In the fourth quarter of fiscal 2024, Conagra's organic sales fell by 2.4% due to a 1.8% year-over-year volume drop [3] - The Foodservice unit reported a 3.9% decline in organic sales to $291.4 million, with volumes down 10.3% [4] Market Trends - Industry-wide macroeconomic challenges have negatively affected consumer purchasing patterns, leading to an anticipated organic net sales growth of a decline between 1.5% to flat for fiscal 2025 [3] - Management expects first-quarter volumes to be the lowest, with improvements expected later in the year [3] Cost and Investment Outlook - Conagra has been experiencing cost inflation, although the trend has been moderating recently [5] - The adjusted gross margin in the fourth quarter was impacted by inflated costs, soft organic sales, and adverse operating leverage [5] - For fiscal 2025, the company anticipates an adjusted EPS in the range of $2.60-$2.65, down from $2.67 in fiscal 2024 [5] Competitive Position - Despite recent market share gains in key categories like frozen foods and snacks, Conagra faces significant challenges from broader industry headwinds and consumption slowdowns [6] - The company's ability to stabilize consumption trends and manage cost pressures will be crucial for its performance in the upcoming fiscal year [7]