Yahoo Finance Conagra (CAG) Up More Than 10% in 3 Months: Will Growth Stay?
Conagra Brands, Inc. CAG stands out as a testimony to strategic innovation and brand resilience amid the ever-evolving consumer goods landscape. The consumer packaged goods food company has been bolstering its portfolio with a diverse range of iconic brands, aligning perfectly with shifting consumer preferences.
Shares of the company have rallied 13.9% in the past three months compared with the industry’s growth of 4.1%
Factors Working Well
Conagra's commitment to innovation has been central to its success. By modernizing its portfolio and staying in harmony with consumers' evolving needs, the company has carved a path toward sustainable growth. Recent innovations have not only re-engaged loyal customers but also attracted new ones, driving excitement and momentum across its brand spectrum. Conagra is making advertising investments in major brands like Birds Eye and Healthy Choice, showcasing a commitment to building and promoting these brands through innovative campaigns.
Conagra has been seeing market share gains in the frozen category. The company experienced a one-point unit share gain in the third quarter of fiscal 2024 despite a challenging landscape. On a volume basis, Conagra’s frozen business outperformed the market. The strength of the frozen category reflects the forte of the company’s brands and the effective execution of the Conagra Way playbook.
Conagra has made several investments in the innovation of key brands of the frozen business, which are yielding a favorable response. During the third quarter, the company saw improvements in frozen sides, frozen breakfasts, frozen seafood and frozen single-serve meals.
Moving on, the company’s International segment has been a bright spot. In the third quarter of fiscal 2024, Conagra continued to deliver momentum in the International business. Net sales in the segment advanced 4.6% year over year to $272 million, reflecting improved organic net sales (up 1%) and positive currency effects (3.6%). Organic sales growth was driven by volumes, which rose 2.7% due to strength in the Mexico and Global Export businesses. Conagra’s Mexico business has been witnessing volume growth for several quarters now, and the continuation of these trends bodes well.
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Will Growth Stay Amid Hurdles?
Conagra has been seeing soft volumes for a while now. In the third quarter of fiscal 2024, volumes dropped 1.8% year over year, hurting the company’s organic sales, which fell 2%. Volumes declined across most company segments, apart from International. The downside was a result of the continuation of the industry-wide slowdown in consumption and the recent changes in consumer behavior.
Industry-wide macroeconomic challenges have adversely impacted consumer purchasing patterns. For fiscal 2024, organic net sales are anticipated to decrease by 1-2%. Apart from this, Conagra has been encountering cost inflation for a while now, though the trend has been moderating of late.
While Conagra has navigated cost inflation and margin pressures, its commitment to brand-building investments remains unwavering. Strategic initiatives across innovation, merchandising and advertising give out positive signals for long-term growth, albeit with short-term margin considerations. Courtesy of these upsides and a customer-centric approach, this Zacks Rank #3 (Hold) company continues to chart a path of sustainable growth amid an ever-evolving operating landscape.
Better-Ranked Staple Bets
McCormick & Company, Inc. MKC is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.3% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 5.4%, on average.
The J. M. Smucker Company SJM, a branded food and beverage product company, currently carries a Zacks Rank #2. SJM has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for J. M. Smucker’s current fiscal year earnings indicates growth of 7.6% from the year-ago reported figure.
Utz Brands Inc. UTZ manufactures a diverse portfolio of salty snacks and currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 24.6% from the year-ago reported numbers.
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Conagra Brands (CAG) : Free Stock Analysis Report
The J. M. Smucker Company (SJM) : Free Stock Analysis Report
McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report
Utz Brands, Inc. (UTZ) : Free Stock Analysis Report
