Why Conagra Brands Stock Sank Today
Key Points
It reiterated its fiscal 2026 guidance.
Unfortunately, this counts on basically flat sales and a notable decline in adjusted profitability.
Conagra Brands (NYSE: CAG), the packaged food company behind such mainstay supermarket brands as Birds Eye and Blue Bonnet, saw its share price slide on Tuesday after publishing a business update. The company reiterated its existing guidance for annual results, and investors showed their displeasure by trading the stock down by more than 4% on the day.
Guiding for disappointment
That morning, Conagra made a presentation at the annual Consumer Analyst Group conference. Ahead of the event, it offered a sneak preview, briefly addressing guidance.
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The company continues to expect a 1% decline to 1% growth in net sales for fiscal 2026 compared to 2025. The adjusted operating margin should land at roughly 11% to 11.5%, and net income not in accordance with generally accepted accounting principles (GAAP) is projected to be $1.70 to $1.85 per share.
Management did not provide any commentary about this in the update. Although it continues to expect a non-GAAP (adjusted) net profit for the year, the provided range is well under the $2.30 per share Conagra earned in 2025... and that, in turn, was almost 14% below the 2024 figure. The unchanged, essentially flat sales guidance didn't help investor morale either.
The fresher the better
Current trends aren't Conagra's friends. The consumer market has leaned toward fresher, healthier food choices, which doesn't bode well for a company built on packaged products. I haven't seen much justification for investing in this stock lately, and its holding to the rather uninspiring annual guidance doesn't change my view.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.