Conagra Brands (CAG) Q1 2027 Financial Results Summary
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Conagra Brands (CAG) Q1 2027: Mixed Results with Earnings Growth Amid Sales Decline — Cautiously Optimistic
Conagra Brands, Inc. (NYSE: CAG) reported its first quarter results for fiscal year 2027, revealing a mixed performance. The company experienced a reported net sales decrease of $36.7 million, or -1.4% year-over-year (YoY), totaling $2.6 billion. However, diluted earnings per share (EPS) rose to $0.36, reflecting a 5.9% increase from the prior year.
Despite the decline in sales, the growth in earnings indicates that Conagra is managing its costs effectively, which is a positive sign for shareholders. The increase in EPS suggests that the company is able to maintain profitability even in a challenging market environment.
Key Metrics:
- Net Sales: $2.6 billion, down $36.7 million or -1.4% YoY
- Organic Net Sales: Decreased 1.1%
- Diluted EPS: $0.36, up 5.9% YoY
- Adjusted EPS: $0.41, up 5.1% YoY
- Operating Margin: 10.3%
- Adjusted Operating Margin: 11.5%
- Net Income: $174 million, up 6.0% YoY
- Free Cash Flow: ($128 million), a decrease of $102 million YoY
Analyst Opinion:
This quarter presents a mixed bag for shareholders. While the decline in net sales is concerning, the growth in earnings per share and net income demonstrates that Conagra is effectively managing its operational costs and capitalizing on its pricing strategies. The reaffirmation of fiscal 2027 guidance, which includes an organic net sales change of -3% to -1%, suggests that the company is preparing for a challenging year ahead but remains confident in its ability to navigate these headwinds.
Operational Highlights:
- Gross Profit: Decreased 3.4% to $619 million, with a gross margin of 23.8%.
- Selling, General, and Administrative Expenses (SG&A): Increased 4.4% to $350 million, primarily due to legacy legal matters.
- Equity Method Investment Earnings: Increased 71.8% to $50 million, driven by favorable market conditions.
- Net Interest Expense: Decreased 2.1% to $92 million due to a reduction in total debt.
Dividend and Share Buyback:
Conagra paid a dividend of $0.35 per share, consistent with the prior year. The company also repurchased $44 million of its common shares during the quarter, indicating a commitment to returning value to shareholders.
Guidance and Future Catalysts:
Conagra Brands has reaffirmed its fiscal 2027 guidance, which includes:
- Organic Net Sales Change: Expected to be between -3% and -1%.
- Adjusted Operating Margin: Projected between 10.0% and 10.5%.
- Adjusted EPS: Anticipated to be between $1.40 and $1.50.
Investors should closely monitor the company's ability to execute on its strategic priorities, including restoring margins and increasing investment. Additionally, the upcoming quarters will be critical as Conagra navigates the challenges posed by inflation and changing consumer preferences.
In conclusion, while the decline in sales is a concern, the growth in earnings and the reaffirmation of guidance suggest that Conagra Brands is on a path to stabilize and potentially grow in the coming quarters. Investors should remain cautiously optimistic as the company continues to adapt to the evolving market landscape.
Note: The following tables present amounts in millions.
| FIRST QUARTER Thirteen Weeks Ended | Thirteen Weeks Ended | Percent Change | |
|---|---|---|---|
| August 30, 2026 | August 24, 2025 | ||
| Net sales | $2,595.9 | $2,632.6 | (1.4)% |
| Cost of goods sold | $1,977.2 | $1,992.0 | (0.7)% |
| Gross profit | $618.7 | $640.6 | (3.4)% |
| Selling, general and administrative | $350.3 | $335.6 | 4.4% |
| Gain on divestitures | — | -42.4 | (100.0)% |
| Operating profit | $268.4 | $347.4 | (22.7)% |
| Pension and postretirement income | $5.9 | $6.1 | (3.8)% |
| Interest expense, net | $91.8 | $93.8 | (2.1)% |
| Equity method investment earnings | $50.4 | $29.4 | 71.8% |
| Income before income taxes | $232.9 | $289.1 | (19.4)% |
| Income tax expense | $58.6 | $124.6 | (52.9)% |
| Net income | $174.3 | $164.5 | 6.0% |
| Earnings per share - basic | |||
| Net income | $0.36 | $0.34 | 5.9% |
| Basic weighted average shares | $479.3 | $478.7 | 0.1% |
| Earnings per share - diluted | |||
| Net income | $0.36 | $0.34 | 5.9% |
| Diluted weighted average shares | $480.0 | $479.6 | 0.1% |
| August 30, 2026 | May 31, 2026 | |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | $371.6 | $218.0 |
| Receivables, less allowance for doubtful accounts of $4.0 and $3.9 | $677.0 | $658.2 |
| Inventories | $2,154.0 | $1,905.4 |
| Prepaid expenses and other current assets | $143.9 | $100.5 |
| Current assets held for sale | $13.3 | — |
| Total current assets | $3,359.8 | $2,882.1 |
| Property, plant and equipment, net | $2,823.8 | $2,862.9 |
| Goodwill | $8,118.9 | $8,119.3 |
| Brands, trademarks and other intangibles, net | $1,819.8 | $1,830.7 |
| Other assets | $1,579.2 | $1,566.4 |
| Noncurrent assets held for sale | — | $13.0 |
| $17,701.5 | $17,274.4 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Notes payable | $32.5 | $34.2 |
| Current installments of long-term debt | $787.5 | $778.2 |
| Accounts and other payables | $1,562.6 | $1,513.3 |
| Accrued payroll | $98.8 | $201.7 |
| Other accrued liabilities | $584.0 | $660.6 |
| Total current liabilities | $3,065.4 | $3,188.0 |
| Senior long-term debt, excluding current installments | $6,940.1 | $6,456.0 |
| Deferred income taxes | $712.0 | $693.4 |
| Other noncurrent liabilities | $579.1 | $579.4 |
| Total stockholders' equity | $6,404.9 | $6,357.6 |
| $17,701.5 | $17,274.4 |
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