Conagra Reaffirms Outlook Even As Tariffs Add To Inflation

Conagra Brands Inc. (NYSE:CAG) on Wednesday posted first-quarter fiscal 2026 results that topped Wall Street expectations but showed year-over-year declines.

Conagra Brands has a diverse portfolio of popular food products, including frozen meals, snacks, and pantry staples. Some of their most recognized brands are Birds Eye, Healthy Choice, Marie Callender’s, Reddi-wip, Slim Jim, and Hunt’s.

The company reported net sales of $2.63 billion, down 5.8% from the prior-year period, while adjusted earnings per share of 39 cents fell 26.4%.

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Wall Street analysts had expected net sales of $2.62 billion and earnings of 33 cents per share.

The decline in net sales reflected a 5.1% drag from mergers and acquisitions, a 0.6% drop in organic sales, and a minor 0.1% foreign exchange impact.

Within organic sales, a 0.6% price/mix benefit, helped by favorable trade expense timing and product mix, was more than offset by a 1.2% decline in volume.

Conagra reported cash and cash equivalents of $698.1 million at the end of the first quarter of fiscal 2026.

Sean Connolly, president and chief executive officer of Conagra Brands, commented, “We successfully delivered on key supply chain objectives, fully restored service levels, and advanced our portfolio reshaping which enabled us to further reduce net debt.”

View more earnings on CAG

“While the operating environment remains dynamic with ongoing inflationary pressure and cautious consumer sentiment, our focus remains on disciplined execution and balanced capital allocation. Today, we are reaffirming our fiscal 2026 guidance,” he added.

Segment results highlighted broad-based weakness. Grocery & Snacks revenue fell 8.7% to $1.1 billion, including a 1.0% decline in organic net sales, as a 0.6% price/mix gain was more than offset by a 1.6% drop in volume.

Refrigerated & Frozen sales slipped 0.9% to $1.1 billion. However, organic net sales rose 0.2%, reflecting a 0.5% increase in volume against a 0.3% decline in price/mix, helped by easier comparisons from last year’s Hebrew National supply constraints.

International segment revenue declined 18% to $212 million, with organic net sales down 3.5% as a 1.7% price/mix increase was offset by a 5.2% volume drop.

Foodservice sales dipped 0.8% to $264 million, while organic net sales rose 0.2%, driven by a 3.8% price/mix gain that was primarily offset by a 3.6% decline in volume.

For fiscal 2026, the company reaffirmed guidance, projecting organic net sales growth between -1% and 1%, an adjusted operating margin of 11.0%–11.5%, and adjusted EPS of $1.70–$1.85. Interest expense is expected to reach about $390 million, with an adjusted tax rate of roughly 24%.

The outlook incorporates continued cost inflation, with core inflation slightly above 4% and tariffs adding roughly 3% annually to cost of goods sold, pushing total inflation into the low 7% range.

Tariff assumptions include a 50% duty on imported tin plate steel and aluminum, 30% on select imports from China, and additional country-specific rates.

The company plans to offset these pressures through cost savings, alternative sourcing, and targeted pricing.

Price Action: CAG shares were trading higher by 3.56% to $18.96 at last check Wednesday.

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