Conagra Brands Stock Falls Despite Strong Earnings and Dividend Boost

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Conagra Brands, the processed food maker known for popular products such as Swiss Miss and Orville Redenbacher, reported fourth-quarter adjusted earnings that exceeded expectations and announced a dividend increase. However, the positive news was overshadowed by disappointing guidance.

Strong Financial Performance

Conagra posted fourth-quarter adjusted earnings of 62 cents per share, surpassing Wall Street’s forecast of 60 cents. Although slightly lower than the year-ago quarter’s earnings of 65 cents, this result showcases the company’s resilience and ability to navigate challenging market conditions.

Additionally, revenue for the quarter reached $2.97 billion, marking a 2.2% increase compared to the previous year. While this fell short of analysts’ projected $3 billion, it still demonstrates Conagra’s overall growth despite potential headwinds.

Dividend Boost

Conagra’s board of directors approved a significant boost to the annual dividend, raising it from $1.32 to $1.40 per share. As a result, shareholders can expect a new quarterly dividend payment of 35 cents per share, scheduled for payment on August 31. This increase reflects management’s confidence in the company’s financial strength and commitment to returning value to its stakeholders.

Disappointing Outlook

Despite beating earnings expectations, Conagra’s future outlook did not meet analysts’ forecasts. The company anticipates modest organic net sales growth of approximately 1% for fiscal year 2024. Furthermore, adjusted earnings for the same period are projected to range between $2.70 and $2.75 per share, lower than fiscal 2023 and below analysts’ anticipated figure of $2.84.

The company attributes these conservative estimates in part to expected inflation in the cost of goods sold, which is anticipated to persist into fiscal year 2024.

Market Reaction

Investors responded to the mixed earnings report by trading Conagra shares downwards. In premarket trading on Thursday, the stock experienced a 1% decline, settling at $32.65. The market’s reaction underscores the importance of forward-looking guidance for investors and their impact on market sentiment.

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