Conagra Brands, Inc. (CAG – Free Report) was in the limelight yesterday, courtesy of two major developments. The company posted better-than-expected results for fourth-quarter fiscal 2018, while it also announced a definite deal to acquire Pinnacle Foods Inc. (PF – Free Report).
Well, Conagra’s shares tumbled 7.3% yesterday, taking this Zacks Rank #4 (Sell) stock’s year-to-date performance to a decline of nearly 5% compared with the industry’s decline of 6.1%. Let’s delve deeper into Conagra’s fourth-quarter performance.
Better-than-Expected Earnings & Sales
In the fiscal fourth quarter, Conagra’s quarterly adjusted earnings from continuing operations came in at 50 cents, surpassing the Zacks Consensus Estimate of 43 cents. Notably, this marked the company’s fourth consecutive earnings beat. The bottom line also came in 35.1% higher than the year-ago tally, courtesy of higher gross margin, lower share count, and reduced effective tax rate. Notably, operating profit grew across all segments.
Conagra Brands Inc. Price, Consensus and EPS Surprise
Conagra Brands Inc. Price, Consensus and EPS Surprise | Conagra Brands Inc. Quote
Conagra generated net sales of $1,966.2.5 million, which advanced 5.6% year over year and came ahead of the Zacks Consensus Estimate of $1,940 million. Sales were driven by contributions from buyouts and favorable currency movements. Continued strength in Refrigerated & Frozen and Grocery & Snacks segments, in particular, also drove sales.
Further, organic sales rose 2%, courtesy of robust growth in both retail and domestic units. Also, each segment witnessed improved pricing and mix, which offset continued retailer marketing investments to support brand saliency, improved distribution and customer trials.
Gross Margin Improves
Adjusted gross profit jumped 6.1% to $573 million with the adjusted gross margin expanding 12 basis points to 29.2%. The upside came on the back of better price/mix, benefits from buyouts and solid supply-chain productivity. This was somewhat negated by elevated input and transportation costs.
