Conagra Reaffirms 2027 Outlook, Earnings Surpass Estimates – But CAG Stock Continues Its Decline

Conagra CEO John Brase said the company remains on track for fiscal 2027 as it works to restore margins, increase investment, reduce complexity and rebalance capital allocation.

• Conagra reported adjusted EPS of $0.41, above Fiscal AI's $0.28 estimate, while adjusted EBITDA rose 2.4% to $451 million.
• Organic net sales declined 1.1% with a 2.1% drop in volume offsetting a 1.0% benefit from price/mix.
• The company reaffirmed its FY27 outlook, including adjusted EPS of $1.40 to $1.50 and organic net sales growth of -3% to -1%.

Conagra Brands Inc. (CAG) reported first-quarter fiscal 2027 results on Wednesday, with adjusted earnings and earnings before interest, taxes, depreciation, and amortization (EBITDA) surpassing Fiscal AI estimates, while the company maintained its full-year outlook.

Conagra reported net sales of $2.6 billion, down 1.4% year-over-year. Organic net sales declined 1.1%, with a 2.1% decline in volume offsetting a 1.0% benefit from price/mix.

Adjusted earnings per share (EPS) came in at $0.41, compared with Fiscal AI's $0.28 estimate, while adjusted EBITDA rose 2.4% to $451 million, above Fiscal AI's $345.81 million estimate.

CAG shares were down 3% at the time of writing on Wednesday morning. The stock has lost over 11% so far this month.

CEO Highlights Business Priorities

Conagra President and CEO John Brase said the company had a solid start to fiscal 2027, with top-line results largely in line with expectations and profit ahead of expectations despite a challenging operating environment.

Brase said the company is acting on previously outlined priorities, including restoring margins, increasing investment, reducing complexity and rebalancing capital allocation. He added that those efforts are translating into measurable progress across the business.

While acknowledging that more work remains, Brase said Conagra remains on track to deliver the year and is reaffirming its fiscal 2027 guidance.

FY27 Outlook Remains Unchanged

Conagra maintained its fiscal 2027 outlook for organic net sales to decline 3% to 1%, adjusted operating margin of 10.0% to 10.5% and adjusted EPS in the range of $1.40 to $1.50.

The company also maintained its expectations for approximately $140 million in equity method investment earnings, about $25 million in pension income, approximately $360 million in net interest expense, an effective tax rate of about 24%, capital expenditures of approximately $550 million, free cash flow conversion above 90%, and year-end net leverage of approximately 4.0x.

Volume Decline Weighs On Sales

Conagra's organic net sales decline was driven by a 2.1% decrease in volume, partly offset by a 1.0% increase from price/mix.

Grocery & Snacks organic net sales declined 2.0%, with volume down 5.4% and price/mix up 3.4%. Operating profit in the segment fell 21.5% to $205 million. Refrigerated & Frozen organic net sales declined 1.6%, while International organic net sales increased 0.9%.

Foodservice was the strongest-performing segment, with organic net sales increasing 3.3% and operating profit rising 11.4% to $31 million.

Margins And Cash Flow

Conagra reported an adjusted operating margin of 11.5%, compared with a reported operating margin of 10.3%. Adjusted gross margin declined 62 basis points from the prior-year period.

Adjusted SG&A decreased 3.7% to $321 million, while advertising and promotion spending increased 15.1% to $61 million.

Net cash used in operating activities was $4 million, compared with $121 million generated in the prior-year period. Capital expenditures totaled $124 million, resulting in negative free cash flow of $128 million for the quarter.

Conagra ended the quarter with $7.4 billion in net debt, down 2.5% from the prior-year period, while net leverage stood at 3.99x.

Retail View On CAG

Retail sentiment on Stocktwits turned ‘Bearish’ over the past 24 hours, accompanied by ‘High’ message volumes. CAG was also among the trending tickers on the platform at the time of writing.

CAG shares have dropped over 18% year-to-date.

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