Conagra Brands, Inc. CAG, one of North America's leading branded food companies, is gearing up to showcase a wave of innovations slated for rollout in 2025. These advancements promise to bolster Conagra's competitive edge and further enhance its product offerings across key markets. In detailing its fiscal 2025 financial outlook, Conagra acknowledged recent operational hurdles.

CAG’s Updated Fiscal 2025 Outlook

Conagra’s revised estimations indicate challenges posed by supply-chain interruptions and foreign exchange impact during the third quarter of fiscal 2025. For fiscal 2025, the company now anticipates organic net sales growth to decline 2% compared with the previous forecast of flat to 1.5% decrease. Adjusted operating margin is now expected to be 14.4%, down from the previous expectation of 14.8%. 

Adjusted earnings have been revised to $2.35 per share, down from the previously estimated range of $2.45-$2.50. Additionally, the net leverage ratio is anticipated to rise slightly to 3.55x compared with the earlier forecast of 3.4x. Despite these adjustments, Conagra remains optimistic about its long-term financial performance, with fundamental growth strategies staying on course.

Conagra Faces Operational Challenges

Conagra has faced significant challenges in two major product categories during the third quarter of fiscal 2025. In the chicken-based frozen meals segment, production disruptions at a key facility were caused by product quality inconsistencies on the production lines. In response, the company temporarily halted production, implemented operational adjustments and resumed at a slower pace to restore product consistency. These actions resulted in lower volume, net sales and profit for the second half of the fiscal year. 

In the frozen vegetables segment, a surge in consumer demand depleted inventory faster than anticipated. To address this, the company has implemented inventory control measures and scaled back promotions from January to March 2025 to prepare for the Easter season.

Conagra’s Strategic Blueprint for Growth

Conagra is committed to its long-term growth strategy, focusing on product innovation, infrastructure improvements and consumer-driven insights. By aligning operations with evolving market trends, the company ensures its brands stay relevant and competitive. Investments in both product development and operational enhancements are central to Conagra’s strategy, positioning it for sustained growth.

The company is also investing in infrastructure to support future demand and enhance production capabilities. Conagra is upgrading its key chicken-based frozen meals facility, with completion slated for the end of the first quarter of fiscal 2026. These efforts, combined with ongoing investments in the supply-chain and manufacturing processes, are designed to improve operational efficiency and ensure the company remains well-positioned for continued market leadership.

CAG’s Investment Analysis

Conagra’s revised financial forecast indicates challenges from supply-chain disruptions and the foreign exchange impact, leaving investors cautious about its short-term outlook. However, the company’s ongoing focus on product innovation, operational efficiency and consumer-driven strategies implies potential for long-term growth. CAG currently carries a Zacks Rank #4 (Sell).

Shares of Conagra have lost 2.1% in the past month against the industry and S&P 500's growth of 0.5% and 1.8%, respectively.

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Stocks to Consider

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for United Natural Foods’ current financial-year sales and earnings implies growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure. UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average.

Freshpet Inc. FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently has a Zacks Rank #2 (Buy). FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 227.1%, respectively, from the prior-year reported levels. 

Post Holdings, Inc. POST operates as a consumer-packaged goods holding company in the United States and internationally. It currently carries a Zacks Rank #2. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average.

The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the prior-year reported levels.

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