Conagra Brands, Inc. CAG reported fourth-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals.
CAG’s Quarterly Performance: Key Metrics and Insights
Conagra Brands’ adjusted earnings per share (EPS) for the quarter were 47 cents, beating the Zacks Consensus Estimate of 46 cents. The bottom line dropped 16.1% year over year.
Conagra Brands Price, Consensus and EPS Surprise
Conagra Brands price-consensus-eps-surprise-chart | Conagra Brands Quote
Net sales increased 3.6% year over year to $2,882.1 million, slightly exceeding the Zacks Consensus Estimate of $2,876 million. The increase reflected a 7.7% benefit from the 53rd week and a 0.5% favorable foreign exchange impact, partly offset by a 4.6% headwind from M&A activity.
Organic net sales remained flat, supported by a 1.6% increase in price/mix, which offset a 1.6% decline in volume, with the company gaining volume share in categories including frozen single-serve meals, frozen multi-serve meals, frozen vegetables, meat snacks, seeds and pudding. We had anticipated volumes to fall 1% while expecting a 1.5% pricing gain.
Adjusted gross profit declined 1.6% to $706 million, while adjusted gross margin contracted 130 basis points to 24.5%, as productivity initiatives, approximately $6 million in tariff refunds and the benefit of the 53rd week were more than offset by cost inflation and unfavorable operating leverage. Our model projected adjusted gross margin contraction of about 110 basis points to 24.7%.
Adjusted SG&A expenses, which include advertising and promotional expenses, increased 11% to $369 million, due to elevated incentive compensation and the impact of the 53rd week. Adjusted EBITDA declined 11% to $484.4 million.
Decoding CAG’s Segmental Performance
Grocery & Snacks: Net sales rose 0.3% year over year to about $1.2 billion, reflecting a 7.8% benefit from the 53rd week, partly offset by an 8% M&A headwind, while organic net sales grew 0.5%. Organic growth was driven by a 4% increase in price/mix, partially offset by a 3.5% decline in volume. Adjusted operating profit fell 4.1% to $216 million
Refrigerated & Frozen: Net sales increased 5.3% to $1.2 billion, supported by a 7.6% benefit from the 53rd week despite a 1.8% M&A headwind and a 0.5% decline in organic net sales. Organic sales reflected a 0.8% decline in price/mix, partially offset by a 0.3% increase in volume. Adjusted operating profit decreased 18.5% to $139 million.
International: Sales jumped 6.3% to $244 million, benefiting from 6% favorable foreign exchange and a 7.6% contribution from the 53rd week, partially offset by a 4.9% M&A impact and a 2.4% decline in organic net sales. Organic sales were affected by a 3% decline in volume, partly mitigated by a 0.6% increase in price/mix. Adjusted operating profit slipped 7.1% to $33 million.
Foodservice: Net sales rose 8.1% to $302 million, driven by a 7.7% benefit from the 53rd week and 1.8% organic growth, partially offset by a 1.4% M&A headwind. Organic growth was supported by a 2.6% increase in price/mix despite a 0.8% decline in volume. Adjusted operating profit declined 6.9% to $29 million.
CAG’s Financial Health
For fiscal 2026, Conagra Brands generated net cash from operating activities of $1,402.1 million. Capital expenditures totaled $423.4 million, resulting in free cash flow of $978.7 million.
The company ended the year with net debt of approximately $7.1 billion, reflecting a year-over-year reduction and a net leverage ratio of 3.83.
Conagra Brands declared a quarterly dividend of 17.5 cents per share, payable on Sept. 2, 2026, to its shareholders of record as of the close of business on July 30.
What to Expect From CAG in FY27?
For fiscal 2027, the company expects organic net sales to decline 1-3%, adjusted operating margin to be in the range of 10-10.5%, and adjusted EPS of $1.40-$1.50.
The outlook also assumes equity earnings of approximately $140 million and free cash flow conversion of more than 90%.
This Zacks Rank #4 (Sell) stock has fallen 3.7% in the past three months against the industry’s growth of 4.1%.
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Stocks to Consider
United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current fiscal-year earnings implies growth of 254.9% from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 29.9%, on average.
Mama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA flaunts a Zacks Rank of 1. Mama's Creations delivered a trailing four-quarter earnings surprise of 129.2%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30% and 73.3%, respectively, from the year-ago figures.
Hormel Foods Corporation HRL develops, processes and distributes various meat, nuts and other food products to foodservice, convenience store and commercial customers in the United States and internationally. It carries a Zacks Rank of 2 (Buy) at present. HRL delivered a trailing four-quarter earnings surprise of 3.2%, on average.
The Zacks Consensus Estimate for Hormel Foods’ current fiscal-year sales and earnings indicates growth of 1.5% and 9.5%, respectively, from the prior-year reported levels.
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Conagra Brands (CAG): Free Stock Analysis Report
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