Conagra Shares Jump on Positive Q4 Outlook Amid Coronavirus Outbreak

Shares of American packaged foods company Conagra were sailing higher on Wednesday after the company reported that it would see a bump in demand in the fourth quarter due to the coronavirus effect on buying habits.

Traders were ignoring that third quarter financial results missed estimates and were more focused on what was ahead.
It was in mid-February that Conagra shares had dropped after the company cut its full-year guidance following weak orders from restaurants and generally soft retail sales.

Conagra said it expects to exceed its prior guidance but did not release any numbers.

For the third quarter, Conagra reported earnings at an adjusted 47 cents a share compared with the consensus analyst estimate of 49 cents in a FactSet survey. Sales dropped 5.6% to $2.56 billion, while the consensus was $2.58 billion.

“While we are still early in our fourth quarter, we have seen significantly elevated demand for our retail products as consumers have started filling their pantries for more at-home eating,” Chief Executive Sean Connolly stated.

Connolly also said on the earnings call, “We’re incredibly proud of our teams who have been producing and delivering without disruption. While we all remain focused on executing through this rapidly evolving situation, I don’t want to lose sight of the fact that we’ve made significant progress against the operational objectives we established for fiscal 2020.”

He added, “As expected, consumption trends recovered in February, prior to COVID-19 impact. It’s important to keep in mind that our third quarter ended on February 23rd. At that time, there were very few reported cases in the U.S., and notably no widespread change in behavior.”

“As we all know, that has changed significantly in recent weeks. From the second week of our fiscal fourth quarter to-date, we’ve experienced the unprecedented impact of COVID-19 as consumers have stocked up on food and shifted rapidly to eating more at home. Given the quality of our brands and the categories we participate in, Conagra is well-positioned to serve consumers during this time of disruption and extraordinary demand.”

“Our team is hard at work, in close coordination with our customers to ensure that consumers have access to the food they need to stay safe at home. At this point, the magnitude and duration of the COVID-19 impact is still uncertain. However, I can tell you that we expect to exceed our prior full-year guidance for total Company sales and profit metrics, assuming the end-to-end supply chain continues to operate effectively,” he further said.

Disclaimer: We have no position in Conagra Brands Inc. (NYSE: CAG) and have not been compensated for this article.