Conagra Earnings: Sales Down as Consumers Reduce Spending, but Market Overweights Long-Term Effect

Although we saw signs that macroeconomic headwinds on no-moat Conagra might be easing last quarter, that proved to be a mirage. The firm reported organic fiscal-fourth-quarter net sales down 2.4%, mostly from lower volume, although price/mix was also down. Consequently, full-year organic net sales declined 2.1%, worse than prior guidance of down 1%-2% and our estimate before the earnings call of down 1.5%. For fiscal 2025, management has guided to organic growth of down 1.5%-flat, whereas our estimate before the earnings call called for a low-single-digit percentage recovery. We expect to cut our $33 fair value estimate by a dollar or two as we incorporate a more gradual recovery to the top line than we previously forecast.