Conagra Manufacturers Tops Earnings, Income Estimates in Q3

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Chicago, Illinois-based packaged meals firm Conagra Manufacturers reported better-than-expected earnings and income within the third quarter of the fiscal yr 2021, largely pushed by continued elevated at-home meals consumption as a result of COVID-19 pandemic.

The world’s main meals firm mentioned its web gross sales surged greater than 8% to $2.77 billion throughout the three months ended on February 28, 2021. That was above the market expectations of $2.72 billion. Adjusted earnings per share got here in at 0.59, beating analysts’ consensus estimates of 0.58 per share.

Internet gross sales for the grocery & snacks phase elevated 10.8% to $1.1 billion within the quarter reflecting: a 2.3% lower from the impression of the Bought Companies; and a 13.1% improve in natural web gross sales. On an natural web gross sales foundation, quantity elevated 9.4% and worth/combine elevated 3.7%. Quantity benefited from continued elevated at-home meals consumption on account of the COVID-19 pandemic.

Conagra Manufacturers forecasts natural adjusted working margin within the vary of 14% to fifteen% and adjusted EPS between $0.49 to $0.55 within the fourth quarter of the fiscal yr 2021. For fiscal 2022, the corporate expects web gross sales progress (3-year CAGR ending fiscal 2022) of +1% to +2%, an adjusted working margin of 18% to 19%, and adjusted EPS of $2.63 to $2.73.

Conagra Manufacturers’ shares, which about 6% in 2020, traded practically flat at $37.19 on Thursday.

Govt Feedback

“We stay assured that every of our retail domains – frozen, snacks, and staples – is well-positioned to maintain the advantages of the eat-at-home habits shoppers have developed throughout the COVID-19 pandemic. Our continued enterprise momentum, coupled with our disciplined strategy to funding, reinforce our confidence within the long-term potential of the enterprise and our potential to create sustained worth for our shareholders,” mentioned Sean Connolly, president and chief government officer of Conagra Manufacturers.

“We additional demonstrated this confidence by repurchasing practically $300 million of our frequent inventory this quarter, which got here after we raised our quarterly dividend 29% earlier this fiscal yr.”

Analyst Feedback

Conagra Manufacturers (CAG) Q3 EPS of $0.59, barely forward of cons. $0.58, pushed by below-the-line objects. Org. gross sales progress beat (+9.7% vs. +7.3%), though gross and op. margins missed, albeit on the low finish of mgmt’s Q3 information. FY’22 steerage reaffirmed with 8.8mm shares repo’d in Q3, which may add $0.05 to FY’22 EPS. This fall information above cons. gross sales, however under on implied op. revenue at margin information midpoint, pushed by price inflation. The query now on margin development in FY’22,” famous Rob Dickerson, fairness analyst at Jefferies.

Conagra Manufacturers Inventory Worth Forecast

Three analysts who provided inventory rankings for Conagra Manufacturers within the final three months forecast the typical worth in 12 months of $37.00 with a excessive forecast of $40.00 and a low forecast of $34.00.

The typical worth goal represents a -0.40% lower from the final worth of $37.15. Of these three analysts, one rated “Purchase”, one rated “Maintain” and one rated “Promote”, in accordance with Tipranks.

Morgan Stanley gave the bottom goal worth of $38 with a excessive of $48 underneath a bull state of affairs and $25 underneath the worst-case state of affairs. The agency gave an “Equal-weight” ranking on the packaged meals firm’s inventory.

“Advantaged legacy Conagra Manufacturers (CAG) topline progress outlook: Publicity to frozen, a possibility to turnaround refrigerated enterprise, and snacking progress ought to maintain LSD org gross sales progress. PF deal will increase operational complexity and reduces basic visibility: Larger threat of PF disappointing given larger expectations from administration’s robust turnaround observe document,” famous Pamela Kaufman, fairness analyst at Morgan Stanley.

“We see stable topline progress however restricted potential for mid-term goal upside: Alternative to shut gross margin hole vs friends, however see draw back threat if topline/synergy estimates fall wanting optimistic F22 targets. The valuation displays larger leverage: 10.5x 2022 EV/EBITDA valuation displays comparatively larger leverage of three.6x web debt/EBITDA.”

A number of different analysts have additionally up to date their inventory outlook. Conagra Manufacturers had its worth goal boosted by Credit score Suisse Group to $34 from $33. They at present have an underperform ranking on the inventory. Zacks Funding Analysis upgraded Conagra Manufacturers to a maintain ranking from a promote ranking and set a $36 worth goal. Jefferies Monetary Group issued a purchase ranking and a $41 worth goal for the corporate.

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