Conagra Q1 Earnings Beat, Sales Decline
Conagra Q1 earnings posted adjusted EPS $0.41 with sales down 1.4%; reaffirmed 2027 guidance but warned inflation and ad spend could pressure margins.
KEY TAKEAWAYS
- Adjusted EPS rose 5.1% to $0.41, beating estimates while net sales fell 1.4%.
- Organic net sales declined 1.1% on a 2.1% volume drop partly offset by 1.0% price/mix.
- Management reaffirmed fiscal 2027 guidance for adjusted EPS $1.40-$1.50 and 10.0%-10.5% margin.
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Conagra Brands reported first-quarter fiscal 2027 earnings on Sept. 30, 2026, with adjusted earnings per share (EPS) beating estimates despite a year-over-year sales decline. The company reaffirmed its fiscal 2027 guidance while citing inflation, pricing actions, and planned advertising investment as near-term challenges.
Quarterly Results
Conagra said net sales for the quarter ended Aug. 30, 2026, totaled $2.596 billion, down 1.4% from the prior year. Adjusted EPS rose 5.1% to $0.41, surpassing an analyst estimate near $0.28 and modestly exceeding a revenue consensus of about $2.59 billion.
Organic net sales declined 1.1%, driven by a 2.1% volume drop partially offset by a 1.0% favorable price and product mix. The reported sales change also reflected a 0.2% positive foreign-exchange impact and a 0.5% negative effect from mergers and acquisitions. Adjusted operating margin was 11.5%, and adjusted EBITDA, a proxy for operating profit, rose 2.4% to $451 million.
By segment, Grocery & Snacks sales fell 2.6% to roughly $1.1 billion, and Refrigerated & Frozen sales declined 2.1% to about $1.1 billion. International sales increased 2.7% to $218 million, while Foodservice grew 3.2% to $273 million.
Guidance and Cash Flow
Conagra reaffirmed fiscal 2027 targets for organic net sales down 1%–3%, an adjusted operating margin of 10.0%–10.5%, and adjusted EPS of $1.40–$1.50.
The company reported net cash used in operating activities of $4 million, compared with $121 million generated in the prior-year quarter. Capital expenditures totaled $124 million, resulting in negative free cash flow of $128 million. Conagra ended the quarter with $7.4 billion in net debt and a net leverage ratio of 3.99 times. It paid a quarterly dividend of $0.35 per share, totaling about $168 million, and plans a $250 million debt reduction in fiscal 2027, targeting year-end leverage near 4.0 times.
For the second quarter, management expects organic net sales to decline about 2% and operating margin to fall to the high-single digits from the first quarter’s level. They cited inflation, reversal of first-quarter selling, general, and administrative (SG&A) timing benefits, transportation costs, and increased advertising and promotion spending as headwinds.
