TLDR
- Conagra reported Q3 adjusted EPS of $0.39, missing the $0.40 estimate
- Revenue of $2.79 billion beat expectations of $2.76 billion
- Full-year adjusted EPS guidance narrowed to ~$1.70, the low end of prior range
- Organic net sales rose 2.4%, driven by Frozen and Snacks segments
- Cost of goods sold inflation expected to hit ~7% for the full fiscal year, including tariff costs
Conagra Brands (CAG) missed the bottom line in its third-quarter results but managed to top revenue forecasts. The food company posted adjusted EPS of $0.39 against a $0.40 consensus estimate. Revenue came in at $2.79 billion, ahead of the $2.76 billion analysts had penciled in.
Net sales fell 1.9% year-over-year. That said, organic net sales grew 2.4%, helped by a 1.9% price/mix lift and a 0.5% volume gain.
The Refrigerated & Frozen segment was the standout. Organic net sales there rose 3.6%, with volume up 3.9% as the business recovered market share lost during last year’s supply issues.
The Grocery & Snacks segment posted 1.8% organic net sales growth. Foodservice came in at 3.6%.
CEO Sean Connolly called the quarter a step in the right direction. “I am pleased with our third quarter performance as we returned the business to organic net sales growth, reflecting continued upward inflection in our Frozen and Snacks businesses while remaining on track in our cash businesses,” he said.
Volume gains were seen in frozen single serve meals, frozen vegetables, meat snacks, and hot cocoa.
Margins Under Pressure
Adjusted gross margin slipped 112 basis points to 23.7%. Higher organic sales and productivity savings weren’t enough to offset rising input costs.
Cost of goods sold inflation is now expected to reach approximately 7% for the full fiscal year, factoring in tariff expenses. Adjusted net income dropped 22.3% to $188 million.
Adjusted operating margin reached 10.6% in Q3. Conagra expects the full-year figure to land near the high end of its 11.0%–11.5% range.
Guidance Tightened at the Low End
Conagra narrowed its full-year adjusted EPS guidance to approximately $1.70. That’s the floor of its previous $1.70 to $1.85 range — not exactly a confidence booster, but the company isn’t walking it back entirely either.
The company now expects annual net sales at the midpoint of its previous forecast, which called for a range between a 1% decline and a 1% rise.
Higher input costs have been a recurring headache. Conagra had planned price increases to offset rising costs in ingredients like cocoa, olive oil, and palm oil, as well as tariffs on tin-plate steel.
Budget-conscious consumers cutting back on spending and shifting toward cheaper brands have made that a trickier equation. The broader trend toward healthier eating, partly driven by rising use of weight-loss drugs, has also weighed on food company revenues.
Full-year cost of goods sold inflation, including tariff expenses, is expected to come in at approximately 7%.
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