Conagra's Full Year and Q4 Financial Results Couldn't Keep Shares Up

02:34 07/01/2019

American packaged foods company Conagra CAG , saw a big drop in price last week after the company reported fourth quarter financial results and full year results for 2019.

The stock was down almost 12% at $25.57 in late morning trading on the New York Stock Exchange last Thursday.

For the fiscal fourth-quarter, Chicago-based Conagra reported adjusted net income of $175 million, or 36 cents a share. This is compared to the $196 million, or 50 cents a share, in the comparable year-earlier quarter. For the full fiscal year, Conagra said it earned $892 million, or $2.01 an adjusted share, up from $808.4 million, or $1.98 an adjusted share, a year earlier. Expectations had called for $2.06 a share according to FactSet.

'While our results in the fourth quarter were below expectations, we did make good progress in key areas of the business,' CEO Sean Connolly remarked. He pointed to 'transitory events' including increased competition as well as 'isolated manufacturing-related challenges, and weak performance in our Ardent Mills joint venture.'

'Much of our progress was overshadowed by transitory events, including intensified promotional competition in certain categories, several isolated manufacturing-related challenges, and weak performance in our Ardent Mills joint venture,' said Connolly.

Conagra additionally said that 'unexpected merchandising changes' and 'elasticity-related declines' hurt its Hunt's and Chef Boyardee brands. Conagra also cited that a recall of P.F. Chang products and weak Marie Callender's sales also hurt the company's numbers.

'All in this was a far worse quarter than investors we spoke with were anticipating,' wrote Ken Golman of JPMorgan.

Conagra also lowered its outlook and now expects full year 2020 earnings per share guidance to $2.08-$2.18 from $2.10-$2.20.

With plant based foods the trend, the company's meat alternatives are an $800 million business, up 22% from a year ago.

“Our view is that the relative size of animal protein consumption serves as a useful guide for how to think about the market opportunity for plant-based alternatives,” Connolly said on the call.

“As you can see, burgers are important but this market extends well beyond beef patties or even beef.”

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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