CHICAGO - Conagra Brands, Inc. (NYSE: NYSE:CAG) disclosed its financial outcomes for the fourth quarter and the full fiscal year of 2024, indicating a decline in net sales and organic net sales compared to the previous year. The company’s reported net sales fell by 2.3% in the fourth quarter and 1.8% for the full year, while organic net sales decreased by 2.4% and 2.1%, respectively.
The reported operating margin for the fourth quarter stood at a negative 19.1%, primarily due to non-cash goodwill and brand impairment charges. However, when adjusted for these charges, the operating margin was a positive 14.8%. The adjusted earnings per share (EPS) for the quarter was $0.61. For the entire fiscal year, the reported diluted EPS decreased significantly by 49.3% to $0.72, and the adjusted EPS saw a modest decline of 3.6% to $2.67.
Conagra's CEO, Sean Connolly, noted that the company's investments in its brands yielded volume improvements in its Domestic Retail business, particularly in the Frozen and Snacks sectors, where market share gains were also observed. The company expects a gradual easing of the challenging industry trends as consumers adjust to new pricing, and plans to continue brand support investments.
Despite the overall decline in sales, the company achieved a gross margin increase of 135 basis points to 27.7% in the quarter and 107 basis points to 27.7% for the full year, thanks to higher productivity that offset negative impacts such as cost of goods sold inflation and lower organic net sales.
Looking ahead to fiscal 2025, Conagra anticipates organic net sales to range from a 1.5% decrease to flat compared to fiscal 2024, with an adjusted operating margin between 15.6% and 15.8%, and adjusted EPS between $2.60 and $2.65. The company also expects a free cash flow conversion of approximately 90%.
Furthermore, the Board of Directors has maintained the annualized dividend rate at $1.40 per share.
The company's net debt decreased by 8.5%, resulting in a net leverage ratio of 3.37x at the end of the fiscal year.
This information is based on a press release statement from Conagra Brands.
In other recent news, ConAgra Brands has witnessed a series of developments. The food producer, after exceeding consensus estimates for revenue, EBIT, and EPS in the third quarter of fiscal year 2024, is gearing up to release its fourth-quarter results.
Analysts from Citi have projected organic sales growth and earnings per share (EPS) that could potentially surpass consensus estimates. However, the firm has expressed caution regarding fiscal year 2025, predicting that ConAgra's organic sales growth and EPS may fall short of consensus estimates. Meanwhile, Barclays (LON:BARC) has adjusted its price target for Conagra from $31.00 to $34.00, maintaining its Overweight rating on the stock.
In a bid to enhance operations, ConAgra has partnered with tech giant Microsoft (NASDAQ:MSFT) and professional services firm Ernst & Young LLP (EY) to advance its AI initiatives. The company recently appointed Noelle O'Mara as Executive Vice President & President of New Platforms and Acquisitions, aiming to identify and scale new growth platforms and acquisitions.
These are among the recent developments for ConAgra Brands.
InvestingPro Insights
As Conagra Brands (NYSE: CAG) navigates a challenging fiscal year with a mix of declining sales and strategic brand investments, the company's financial health and stock performance are of keen interest to investors. According to InvestingPro data, Conagra boasts a stable market capitalization of $13.77 billion, suggesting a solid company size in the packaged foods industry. Notably, the company's P/E ratio stands at 14.46, presenting a potentially attractive valuation when paired with a low adjusted P/E ratio of 10.88 for the last twelve months as of Q3 2024.
In terms of profitability, Conagra has maintained a strong dividend track record, with dividend growth over the last twelve months reaching 6.06%. This is further supported by the company's impressive history of dividend payments, having done so for 49 consecutive years—an InvestingPro Tip that highlights Conagra’s commitment to returning value to shareholders. Additionally, with a dividend yield of 4.86% as of the latest data, income-focused investors might find Conagra an attractive option for their portfolios.
Another InvestingPro Tip suggests that Conagra is trading at a low P/E ratio relative to near-term earnings growth, which could indicate the stock is undervalued given its earnings potential. This is underscored by the company's solid gross profit margin of 27.34% for the last twelve months as of Q3 2024, reflecting efficient operations despite the reported decline in net sales.
For investors keen on further insights and tips, InvestingPro offers additional guidance for Conagra Brands, with a total of 9 tips available to help make an informed decision. To explore these tips and enhance your investment strategy, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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