Conagra Sets the Tone for Q2 Earnings: Things to Watch for CAG Stock

Core Insights - Conagra Brands, Inc. (CAG) is expected to report a decline in both revenue and earnings for the second quarter of fiscal 2026, with revenue estimated at approximately $3 billion, reflecting a 6.2% decrease year-over-year [1] - The earnings consensus remains at 44 cents per share, indicating a 37.1% drop compared to the previous year [2] Business Recovery and Consumer Behavior - The second quarter is anticipated to show signs of recovery as Conagra has resolved previous supply and service issues, particularly in frozen and protein-heavy categories, leading to improved product availability [3][10] - Consumer behavior is shifting towards value-seeking, especially among lower-income households due to ongoing inflation, prompting Conagra to focus on value-oriented products rather than premium innovations [4][10] Cost Pressures and Margin Outlook - Input-cost inflation, particularly in proteins and packaging, is expected to impact margins negatively, with an anticipated contraction of 330 basis points to 23.1% for the adjusted gross margin in the second quarter [5][10] - Despite productivity initiatives and selective pricing actions, these measures are unlikely to fully mitigate the near-term cost pressures [5] Earnings Predictions - The model suggests a potential earnings beat for Conagra Brands, supported by a positive Earnings ESP of +0.11% and a Zacks Rank of 3 (Hold) [6]