On Friday, Stifel analysts maintained a Hold rating for ConAgra Brands, Inc. (NYSE:CAG) with a consistent price target of $26.00. The decision came after the company reported third-quarter earnings that fell short of expectations, primarily due to supply chain issues in its Refrigerated & Frozen segment. ConAgra’s earnings per share (EPS) for the quarter stood at $0.51, marking a 26% decline from the previous year.
The company experienced a 5% decrease in organic sales during the third quarter, which included a 3% drop in volume and a 2% negative impact from price and mix. Shipments were 3% behind consumption in this period, attributed to challenges in frozen manufacturing. InvestingPro analysis shows the company maintains a solid financial foundation with an Altman Z-Score of 4.06, indicating low bankruptcy risk, despite current challenges. Despite these setbacks, ConAgra reiterated its full-year 2025 guidance, which had been previously adjusted at the Consumer Analyst Group of New York (CAGNY) conference due to the frozen supply constraints.
ConAgra continues to project a 2% decline in organic sales for fiscal year 2025, with an operating margin of 14.4% and an EPS of approximately $2.35. Stifel’s own estimates for the company’s FY25 EPS align with this guidance, anticipating that an inventory rebuild and improved margin performance in the fourth quarter will compensate for the third-quarter shortfall.
The analyst’s commentary highlighted the supply disruptions as a significant factor in the lower-than-expected sales and margin performance for the quarter. However, a better-than-anticipated performance in other financial areas helped to partially offset the impact of these challenges. Despite the miss in the third quarter, Stifel’s outlook for ConAgra remains unchanged, with a continued Hold rating and a price target set at $26.
In other recent news, ConAgra Brands Inc. reported its third-quarter financial results for fiscal year 2025, revealing earnings and revenue that fell short of analyst expectations. The company posted earnings per share (EPS) of $0.51, below the forecasted $0.54, and revenue of $2.84 billion, which missed the anticipated $2.92 billion. Despite these challenges, ConAgra maintained its full-year 2025 guidance, projecting a 2% decrease in organic sales, an operating margin of 14.4%, and an EPS of approximately $2.35. Stifel analysts upheld a Hold rating for ConAgra, with a price target of $26, noting potential stabilization in the near term.
The company faced disruptions in the supply chain, particularly affecting its Refrigerated & Frozen segment, leading to a 3% drop in volume and a 2% negative impact from price and mix changes. ConAgra’s organic sales declined by 5% in the third quarter, and the discrepancy between shipments and consumption was noted, with shipments trailing by 3%. Despite these setbacks, ConAgra reported a significant free cash flow conversion rate of 125% and reduced its debt by $500 million over the past year.
The company emphasized strong performance in its frozen foods and protein-centric snacks segments, attributing success to strategic initiatives and operational improvements. ConAgra remains focused on volume growth and margin expansion and is monitoring external factors such as inflation and potential import tariffs. Analysts from Stifel aligned with the company’s full-year EPS estimate, expecting improved margin performance in the fourth quarter to offset third-quarter shortfalls.
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