Are Investors Worried About ConAgra Earnings?

Are Investors Worried About ConAgra Earnings?

ConAgra will release its quarterly report on Thursday, and investors are anxiously hoping that the company will give them some good news. Even though the stock has fallen substantially in the past month, a boost in ConAgra earnings could give shareholders something to celebrate and push the shares back toward the highs it set earlier in the summer.

ConAgra isn't a household name, but its brands are much better known, with offerings including Orville Redenbacher popcorn, Peter Pan peanut butter, and Healthy Choice frozen dinners. Yet as staid as the food business is, competition has ramped up sharply lately. Combined with cost challenges, ConAgra has had to work hard in order to consolidate its past acquisitions and sustain its competitive advantages. Let's take an early look at what's been happening with ConAgra over the past quarter and what we're likely to see in its report.

Stats on ConAgra

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$4.30 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance. *Based on preannounced adjusted earnings.

Will ConAgra earnings grow faster this quarter?
In recent months, analysts have cut their views on ConAgra earnings, shaving $0.13 per share from both their August-quarter estimates and their full-year fiscal 2014 projections. The stock has behaved somewhat negatively, falling about 6% since mid-June.

ConAgra actually came into the quarter on a positive note, reporting solid results in its May quarter. Its acquisition of Ralcorp helped it earn some cost savings, and further measures to try to rein in food cost inflation helped lead to a 3% rise in consumer foods volume even after taking out the impact of the acquisition.

But earlier this month, ConAgra preannounced adjusted earnings for the August quarter, saying they would come in at $0.37 per share. The company cited weakness in its consumer foods segment, with specific difficulty facing some of its retail brands that hurt unit volumes. ConAgra also cut its earnings outlook for the current fiscal year by $0.02 to $0.06 per share, even as it aims to shift its promotional and pricing strategies in order to try to improve performance in its consumer foods business. By contrast, rival Kellogg has had continuing success with its cost-cutting measures, as it managed to hold off inflationary trends to post higher operating profits.

One key to ConAgra's long-term success is its private-label partnerships with grocery chains and other food retailers. Yet an incident involving a brand of cookie dough it produces for Kroger led to a recall, as ConAgra mistakenly put peanut butter cookie dough in packages labeled for chocolate chip cookie dough, raising concerns that those with peanut allergies could be at risk of adverse reactions. Private label food has given ConAgra an important edge over top packaged-food provider Kraft Foods , especially given the interest among groceries to offer them in efforts to boost their own margins. Any quality control issue could be devastating to ConAgra's results.

In the ConAgra earnings report, watch for the breakdown between branded products and private-label sales. If a disparity between the two major segments comes through, it could point the way toward a potential new strategy for ConAgra to follow to boost overall growth.

What's the best play in food right now?
One food-related company is among the stocks we've picked as the "3 Companies Ready to Rule Retail." Read more about it and all of our picks in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

Click here to add ConAgra to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Are Investors Worried About ConAgra Earnings? originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned, either. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published