Conagra reports Q1 results: ‘this stock might come alive again’

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Conagra Brands Inc (NYSE: CAG) is in the red this morning even after the foods company reported strong results for its fiscal first quarter.

Conagra Q1 earnings snapshot

Swung to $77.5 million net loss that translates to 16 cents a share
Adjusted EPS was 57 cents as per the earnings press release

Sales jumped 9.5% on a year-over-year basis to $2.90 billion
Consensus was 52 cents of adjusted EPS on $2.85 billion in sales
10.3% increase in cost of good resulted in 60 bps hit to gross margin

Other notable figures

Other notable figures in the earnings report include a 10.5% annualised increase in grocery and snacks sales. Refrigerated and frozen goods generated 9.6% more sales than last year.

International sales were up 1.3% year-on-year. According to Conagra Brands, it was able to offset inflationary pressures this quarter with higher prices and improved supply chain productivity.

What it might mean for the Conagra stock

The Chicago-headquartered company reiterated its guidance for the full year. Commenting on which, Brian Sozzi (Yahoo Finance) said:

This might be the first sign of we’re moving beyond the peak in inflation. Coupled with the pricing Conagra pushed through this quarter, this stock might come alive again. Less inflationary impact, price increases sticking, that’s a pretty good setup for it.

Conagra forecasts about a 5.0% increase in organic net sales this year with adjusted operating margin at roughly 15%.

Wall Street sees upside to $36 on average in this stock – that’s about a 10% increase from here. So, it might be fair to trade Conagra stock here.

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