ConAgra shares jump after topping expectations, raising FY23 forecast

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By Sam Boughedda

ConAgra (NYSE:CAG) shares jumped Thursday after the company raised its annual forecasts and topped quarterly profit and revenue expectations.

The company's revenue came in at $3.3 billion versus the consensus estimate of $3.26B, boosted by a 17% improvement in price/mix, which was driven by the company's inflation-driven pricing actions.

Conagra shares are up over 3% at the time of writing.

With labor, logistics, and raw material costs increasing, companies such as Conagra, which has brands such as Birds Eye and Chef Boyardee under its banner, have raised prices over the last year or more.

During its fiscal second quarter, operating margin increased 320 basis points to 16.6%. Meanwhile, adjusted earnings per share increased 26.6% to $0.81, $0.15 better than the analyst estimate of $0.66.

"Our second quarter results reflect the ongoing strength of our brands and successful execution of the Conagra Way playbook as evidenced by our robust top-line growth, margin recovery, and earnings results," said Sean Connolly, president and chief executive officer of Conagra Brands. "Our decisive actions to offset inflation coupled with improved service levels and productivity allowed us to successfully navigate ongoing inflationary pressures and industry-wide supply chain challenges as each segment delivered adjusted operating margin expansion in the quarter."

Due to a strong performance in the first half of the fiscal year, the company said it is raising its full-year outlook for fiscal 2023, with net sales growth expected to be 7% to 8%, adjusted operating margin between 15.3% and 15.6% and adjusted EPS seen from $2.60 to $2.70 representing growth of 10% to 14% compared to last year.

Following the release, Deutsche Bank analysts said in a reactionary note that the results were "clearly" good results, and the "forward outlook is assertive."

"The key question from here will be sustainability and any future risks to implied momentum (noting that implied 2H adjusted EPS is now $1.22 to $1.32 vs. current DBe $1.03/Street $1.09)," the analysts added.