What to Expect From ConAgra Earnings

Companies and Brands

Published: June 29, 2015 11:35 am

ConAgra Foods Inc. (NYSE: CAG) is scheduled to release its fiscal fourth-quarter financial results Tuesday before the markets open. Thomson Reuters has consensus estimates of $0.59 in earnings per share (EPS) on $4.14 billion in revenue. In the same quarter of the previous year, the packaged foods company posted EPS of $0.55 and revenue of $4.44 billion.

Somewhat mysteriously, ConAgra said that due to its third-quarter performance, the company was raising its guidance for adjusted, diluted EPS for the fiscal year to $2.15 to $2.19. Analysts had pegged earnings at $2.17 per share and revenue at $15.87 billion.

Back in April, CEO Gary Rodkin retired and Sean Connolly stepped into the role.

The company must reckon that it has put most of the bad news from its Private Brands division behind it and that performance will improve in the fiscal fourth quarter. ConAgra notes, though, that commodity costs are rising, particularly for durum wheat and snack nuts. The company has begun raising its prices and says that it should pass along the higher costs “over time.” But the continued drought in California will affect the price of many commodities, almonds and walnuts among the most obvious. For ConAgra, the issue is whether it can raise prices high enough and fast enough to regain profitability in the Private Brands group.

So far in 2015, ConAgra shares have had a strong performance. The stock is up 23% year to date and up 56% in the past 52 weeks.

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A few analysts weighed in on ConAgra ahead of earnings:

Merrill Lynch reiterated an Underperform rating.
JPMorgan upgraded the stock to Overweight from Neutral and raised the price target to $52 from $39.
Deutsche Bank has a Hold rating and raised its price target to $38 from $36.
Credit Suisse has a Neutral rating and raised its price target to $42 from $34.

Shares of ConAgra were down 0.7% Monday to $43.70. The company’s stock has a consensus analyst price target of $41.33 and a 52-week trading range of $28.93 to $44.16.

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