Conagra Slides 4% as Weak Earnings and Bleak Outlook Rattle Investors
Summary
Conagra Brands (CAG) shares fell 4% after reporting disappointing Q4 results and issuing a bleak FY26 outlook, missing analyst expectations. Adjusted EPS and revenue both fell short, with organic sales declining. The company cited inflation and new U.S. tariffs as significant headwinds. While full-year sales and EPS were down, Conagra did manage to reduce net debt and generate strong operating cash flow, providing some financial stability.
Conagra Shares Plunge on Disappointing Q4 Results and Bleak FY26 Outlook
OMAHA, NE – Conagra Brands (NYSE:CAG) experienced a significant downturn in its stock price on Thursday, with shares dropping approximately 4%. The decline followed the packaged food giant's release of weaker-than-expected fourth-quarter results and a cautious fiscal year 2026 outlook that fell considerably short of Wall Street's projections.
Q4 Fiscal 2025 Performance Misses Estimates
For the fiscal fourth quarter, Conagra reported adjusted earnings per share (EPS) of $0.56, missing the consensus estimate of $0.59. Revenue also underperformed, declining 4.3% year-over-year to $2.78 billion, significantly below analyst expectations of $2.85 billion. The revenue shortfall was primarily driven by a 3.5% drop in organic sales, attributed to both lower volumes and modest pricing pressures.
Fiscal Year 2026 Guidance Underwhelms
Conagra's forward-looking guidance for fiscal year 2026 proved to be a major disappointment for investors. The company anticipates adjusted EPS to range between $1.70 and $1.85, a stark contrast to the $2.19 analysts had been forecasting. Organic sales are projected to be flat at best, while operating margins are expected to fall within the 11.0% to 11.5% range.
Headwinds: Inflation and Tariffs
The company cited persistent inflation and the recent introduction of U.S. tariffs as key challenges impacting its financial projections. Conagra estimates core inflation at approximately 4% and warned that tariffs could increase its annual cost of goods sold by about 3% before any mitigating cost-offsetting measures are implemented.
Fiscal Year 2025 Overview
For the full fiscal year 2025, Conagra reported a 3.6% decline in net sales, totaling $11.6 billion, and a 13.9% drop in adjusted EPS to $2.30. Despite these weak overall results, the company did achieve some financial stability by reducing its net debt by 4.4% to $8.0 billion and generating $1.7 billion in operating cash flow. These actions offer a degree of resilience amidst an otherwise challenging economic environment.