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2022-04-07 18:26

Conagra Brands Inc. stock closed roughly flat on Thursday after the company reported its third quarter financial results. Conagra Brands is a holding corporation for consumer-packaged goods based in Chicago, Illinois. Conagra manufactures and distributes products under a variety of brand names that can be found in supermarkets, restaurants, and other food service locations.

Quarterly financial highlights
The company has reported positive financial results for its third quarter, the net sales surged by 5.1% while the organic net sales rose by 6.0%. Moreover, on the basis of two-year compounded annualized basis, both the net sales and organic net sales increased by 6.8% and 7.8% respectively.

The company’s operating margin declined 387 basis points by 12.3%. The adjusting operating margin decreased 230 basis points by 13.7%. For the third quarter, diluted earnings per share (EPS) fell 22.4% to $0.45, while adjusted EPS fell 1.7% to $0.58. Third-quarter EPS grew 3.5% on a two-year compounded annualized basis, while adjusted EPS increased 11.1%.

The President and CEO of the company, Sean Connolly said:

“Our business delivered another quarter of strong net sales growth as our brands continued to resonate with consumers. Our focus on strategic innovation and our intentional approach to investment helped us capture share across each of our domains – frozen, snacks, and staples. The team's dedication to executing our Conagra Way playbook has continued to pay dividends in the face of a challenging external landscape."

Outlook for the future
The firm is revising its fiscal 2022 guidance and offering fourth-quarter guidance to reflect sustained top-line growth, increased cost-of-goods-sold inflation, and the timeframe of additional price measures. For the full year 2022, organic net sales growth is estimated to be around +4%, compared to previous guidance of around +3%. While the Gross inflation for the full year 2022 is estimated to reach around 16%, up from 14% previously predicted.

The adjusted operating margin is estimated to be around 14.5%, down from 15.5 percent previously forecast. And lastly the adjusted EPS is estimated to be around $2.35, compared to prior expectation of around $2.50. For the fourth quarter 2022, the company’s organic net sales are anticipated to be around +7% whereas the gross inflation is expected to hit 16%. The company is expecting its adjusted operating margin to be nearly 15.5%, with adjusted EPS of $0.64.

The stock that trades at a PE multiple off 15.12 has recovered roughly 15% in less than a month.