Conagra Brands, Inc. CAG has reported mixed results for third-quarter fiscal 2018 (February 2018).
Earnings
In the fiscal third quarter, Conagra’s quarterly adjusted earnings from continuing operations came in at 61 cents, surpassing the Zacks Consensus Estimate of 55 cents. The bottom line also came in 27.1% higher than the year-ago tally.
Revenues
Conagra generated net revenues of $1,994.5 million in the reported quarter, missing the Zacks Consensus Estimate of $2,010 million. However, the top line marginally exceeded the year-ago tally by 0.7%.
Segmental Details
Grocery & Snacks: The segment’s quarterly sales came in at $838.3 million, down 1.3% year over year.
Refrigerated & Frozen: Quarterly revenues were up 3.2% year over year to $688.5 million.
International: Sales of the segment came in at $223.4 million, up 8.9% year over year.
Foodservice: The segment’s quarterly revenues summed $244.3 million, down 6% year over year.
Conagra Brands Inc. Price, Consensus and EPS Surprise
Conagra Brands Inc. Price, Consensus and EPS Surprise | Conagra Brands Inc. Quote
Other Financial Fundamentals
Conagra’s cost of goods sold was up 2.6% year over year to $1,395.7 million. Selling, general and administrative (SG&A) expenses dropped 5.6% year over year to $330.2 million. Interest expenses dipped 12.7% to $39.8 million due to lower debt levels. Adjusted gross profit contracted 160 basis points (bps) to 30% during the reported quarter.
Conagra exited the fiscal third quarter with cash and cash equivalents of $132.9 million, lower than $251.4 million recorded at the end of fiscal 2017. Senior long-term debt (excluding current portion) came in at $3,037 million, up from $2,573.3 million reported as of May 28, 2017.
In the nine-month period ended fiscal 2018, Conagra generated net cash of $842.3 million from operating activities, slightly down from $846.5 million reported in the year-earlier period. Capital spent on additions of property, plant and equipment totaled $175.9 million, up 11% year over year.
During the fiscal third quarter, Conagra repurchased nearly 8 million common stock for $280 million.
Outlook
Conagra intends to enhance its near-term profitability on the back of stronger top-line performance. This Zacks Rank #2 (Buy) company believes new merchandizing, distribution and consumer trail-related investments will bolster the sales of its major brands. However, input cost inflation and flaring up transportation expenses are expected to drag down margins in the upcoming quarters.
The company anticipates to report adjusted earnings in the $2.03-$2.05 per share range for fiscal 2018, higher than the previously-stated range of $1.84-$1.89 per share. Moreover, Conagra expects to buyback common stock worth $1.1 billion in the fiscal.
Other Stocks to Consider
Other top-ranked stocks in the same space are listed below:
Medifast, Inc. MED flaunts a Zacks Rank of 1 (Strong Buy). The company’s earnings per share (EPS) are projected to be up 15% in the next three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
Post Holdings, Inc. POST sports a Zacks Rank of 1. The company’s EPS is estimated to rise 14% over the next three to five years.
US Foods Holding Corp. USFD also carries a Zacks Rank of 1. The company’s EPS is predicted to grow 16.1% during the same time frame.
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