Conagra Brands Inc (NYSE: CAG) reported its fiscal third-quarter 2025 results, revealing a decline in key metrics while maintaining its fiscal 2025 guidance. The company’s earnings were significantly affected by decreased net sales and a decline in operating margins. These results reflect ongoing challenges, including supply chain constraints and inflationary pressures. The executive leadership remains optimistic about the future, underscoring a robust strategy to navigate the complex market landscape, emphasizing the resilience demonstrated by their famed brands.

Conagra Brands Inc Results

The following table highlights Conagra Brands Inc's third-quarter financial results compared to the previous year:

Financial Metric	Q3 FY2025	Q3 FY2024	Year-over-Year Change
Net Sales	$2.8B	$2.99B	-6.3%
Gross Profit	$710M	$858M	-17.3%
Operating Margin	8.4%	-	-712 bps
Adjusted Operating Margin	12.7%	-	-369 bps
EPS (Diluted)	$0.30	$0.64	-53.1%
Adjusted EPS	$0.51	-	-26.1%
Net Income	$145M	$309M	-53.0%

The financial performance was below expectations, with reported net sales dropping to $2.8 billion, a 6.3% decrease from the previous fiscal year. This was influenced by strategic investments, inventory supply constraints, and inflation.

Revenue Breakdown

The revenue performance across Conagra's major segments reveals varied challenges and opportunities:

Segment	Q3 FY2025 Revenue	Quarter Change	Year-over-Year Change
Grocery & Snacks	$1.2B	-3.2%	-
Refrigerated & Frozen	$1.1B	-7.2%	-
International	$224M	-17.6%	-
Foodservice	$256M	-6.1%	-

Segment Analysis

Grocery & Snacks : Saw a decrease of 3.2% in net sales due to a drop in price/mix and volume driven by strategic investments, although there was volume share growth in the snacking and staples categories.
Refrigerated & Frozen : Witnessed a 7.2% downturn in net sales attributed to product availability issues and strategic pricing moves, though this segment gained volume share in notable categories like frozen desserts.
International : The most affected segment, with a significant 17.6% sales decrease, primarily driven by detrimental foreign exchange rates and M&A impacts. The company, however, managed a 4.4% increase in price/mix on an organic basis.
Foodservice : Faced a 6.1% reduction due to a volume drop tied to declining commercial traffic, offset somehow by an increase in product pricing.

Key Developments

During the quarter, Conagra faced several operational challenges, including the impact of unfavorable forex rates and cost of goods sold inflation, contributing to a gross profit reduction of 17.3% to $710 million. The gross margin suffered a decrease of 331 basis points, impacted by lower sales and inflation.

The company’s strategic investments led to a short-term dip in price/mix, aligning with its focus on reinforcing its brand strength amidst an uncertain market. Additionally, adjusted gross profits fell by 19.1%, to $704 million.

Comments from Company Officers

Sean Connolly, CEO of Conagra Brands, provided insights into the company’s performance and future prospects. Connolly acknowledged the quarter unfolded as anticipated, emphasizing continued strong brand resilience despite shipment lagging due to inventory shortages. He reaffirmed the company’s unchanged fiscal 2025 guidance and commitment to improving service levels.

Dividend and Share Repurchases

Conagra maintained a dividend payment of $0.35 per share for the quarter and highlighted a 2.1% increase in overall dividend payments to $502 million. The company still emphasizes generating free cash flow with a conversion rate exceeding 100%.

Conagra Brands Inc Stock Forecast

Based on the current financial performance, Conagra's stock is under pressure, affected by macroeconomic factors and internal challenges. The market capitalization stands at $13.5 billion, reflected in the post-earnings decline, with shares experiencing a dip of approximately 0.83%.

Stock Price Projections

High Projection : Given the restoration of inventory levels and operational improvement, shares could potentially rebound to a previous high, reflecting optimism in strategic execution and consumer loyalty.
Low Projection : Continued supply chain difficulties and macroeconomic instability could put downward pressure, with shares touching new lows if operational improvements lag.

These projections account for the company's targeted expenses, cash flow generation, and ability to navigate industry headwinds. Investors will likely monitor these factors closely, with expectations aligning around strategic execution to recover lost ground.

Conclusion

Conagra Brands faces a complex operating environment, challenged by internal and external pressures affecting its financial performance. However, the leadership's confidence in maintaining fiscal 2025 guidance suggests a robust long-term strategy. Investors and stakeholders will watch closely as Conagra navigates these challenges, with a focus on realizing potential growth and maintaining market competitiveness.