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 stated its internet gross sales surged greater than 8% to $2.77 billion in the course of 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 affect of the Offered Companies; and a 13.1% enhance in natural internet gross sales. On an natural internet gross sales foundation, quantity elevated 9.4% and worth/combine elevated 3.7%. Quantity benefited from continued elevated at-home meals consumption because 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 internet 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.

Government 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 customers have developed in the course of 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 means to create sustained worth for our shareholders,” stated 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 steering reaffirmed with 8.8mm shares repo’d in Q3, which might add $0.05 to FY’22 EPS. This autumn information above cons. gross sales, however beneath 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 Value Forecast

Three analysts who supplied 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 common 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 line with Tipranks.

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

“Advantaged legacy Conagra Manufacturers (CAG) topline progress outlook: Publicity to frozen, a chance to turnaround refrigerated enterprise, and snacking progress ought to maintain LSD org gross sales progress. PF deal will increase operational complexity and reduces elementary visibility: Better threat of PF disappointing given increased expectations from administration’s robust turnaround monitor report,” 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 in need of optimistic F22 targets. The valuation displays increased leverage: 10.5x 2022 EV/EBITDA valuation displays comparatively increased leverage of three.6x internet 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 score on the inventory. Zacks Funding Analysis upgraded Conagra Manufacturers to a maintain score from a promote score and set a $36 worth goal. Jefferies Monetary Group issued a purchase score and a $41 worth goal for the corporate.

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