What To Expect From Conagra Brands (CAG) In Q4 Earnings?

Conagra Brands, Inc. (NYSE:CAG) is slated to report fourth-quarter fiscal 2017 (ended May 31, 2017) results on Jun 29, before the market opens.

Over the last one month, Conagra’s shares have lost 3.51%, narrower than the Zacks categorized Food - Miscellaneous industry’s decline of 4.31%.

In fact, the company pulled off a positive average earnings surprise of 10.66% over the last four quarters. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Stronger demand for on-trend brands such as Hunts and Healthy Choice are expected to drive Conagra’s aggregate sales in the upcoming quarters. Moreover, strategic acquisitions of fast-growing meat snack brand, Duke’s and premium seed snacks making brand, BIGS (in Apr, 2017) are expected to bolster the company’s revenues in the near term.

We note that Conagra intends to boost its profitability in the to-be-reported quarter on the back of stronger top-line performance, improved price/mix, input cost favorability and higher supply-chain productivity. For fiscal 2017, the company anticipates accruing earnings slightly at the higher end of its previously projected guidance of $1.65–$1.70 per share.

However, the company affirmed that a stronger U.S. dollar would continue to weigh over its overseas’ market revenues and profitability in the quarters ahead. Additionally, headwinds such as sudden inflation of major inputs (such as soybeans, pork, oats, beef, poultry, wheat, and corn) or extensive business rivalry remains a concern, going forward.

Earnings Whispers

Our proven model does not conclusively show that Conagra will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Conagra has an Earnings ESP of -2.63%. This is because the Most Accurate estimate is at 37 cents, while the Zacks Consensus Estimate is pegged higher at 38 cents.

ConAgra Foods Inc. Price and EPS Surprise

ConAgra Foods Inc. Price and EPS Surprise | ConAgra Foods Inc. Quote

Zacks Rank: Conagra carries a Zacks Rank #3, which when combined with a negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are three stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

The Kraft Heinz Company (NASDAQ:KHC) has an Earnings ESP of +4.17% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Clorox Company (NYSE:CLX) has an Earnings ESP of +0.67% and also carries Zacks Rank #3.

Cott Corporation (NYSE:COT) has an Earnings ESP of +6.25%, and a Zacks Rank #3.

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