Consumer packaged food giant Conagra Brands, Inc. (NYSE: CAG) The stock has recovered in its fiscal year Q3 2022 earnings. However, the company lowered its guidance mainly due to rising inflationary pressures. The company has faced expected cost pressures that have turned into margins. However, it is implementing inflation-driven price-actions that will be seen in FY 2023 as consumer demand is still very strong. Remember the price increase being passed on to consumers still takes time to hit the bottom line. High inflation is affecting its strong business lines, including meat, snacks and frozen. Pressure on logistics and freight costs has also eaten into margins. These are the short-term effects that the company should be in a bad mood as the US Federal Reserve seeks to bring it closer to the 2% inflation target in 2022. It is moving ahead with seven interest rate hikes. Prudent investors looking to move from price and interest rate hikes to margin improvement could see opportunistic pullback levels before Congress releases its fiscal Q1 2023 earnings.
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Q3 Financial 2022 Earnings Release
On April 7, 2022, Conagra released its financial third-quarter results for the quarter ended February 2022, 2022. The company reported a consistent earnings-per-share (EPS) profit of 0.5 0.58, excluding non-recurring item compliance analyst estimates for $ 0.58. . Revenue grew 5.1% year-on-year (YOY) to $ 2.91 billion Beating analysts estimate $ 2.84 billion. Net sales rose 5.1%. Organic net sales grew 6% year on year. Operating margin decreased by 387 bps to 12.3%. Conagra CEO Sean Connolly commented, “We have experienced expected cost pressures as we progress in the third quarter, and we expect that these pressures will continue until the fourth quarter, especially in some frozen, refrigerated and snacks businesses.” In response, we have taken steps to implement additional inflation-driven pricing measures. We will begin to see the benefits of these measures in the first quarter of FY 2023 Consumer demand remains strong in the face of our pricing activities, but there will continue to be a gap between rising inflation and rising inflation. The benefits of our mitigation action. “
Downside guidance
Conagra has issued lower guidelines for EPS of $ 2.35 vs. 43 2.43 from the previous ারের 2.50 for the full-year financial year. Fiscal full-year 2022 organic net sales growth is expected to be around 4%, higher than the previous guideline of 3%.
Conference Call Takeaways
CEO Shawn Connolly noted that the company has met its expectations for fiscal year 3 and is committed to the Congra Way Playbook in creating superior products that create a lasting connection between customers and its brand. The company has gained market share in key segments on a 1 to 2-year basis. He noted, “And it is important to note that in response to inflation-driven pricing that has been implemented in the market to date, resilience has been favorable to historical patterns, even higher than we expected তা the higher relative value that our portfolio offers.” Demand for this specialty has grown significantly as a result of recent corporate scandals. He reflected on how inflation has been higher than expected throughout the quarter, prompting price increases that have bolstered strong consumer demand. That would be an additional $ 100 million, up 26% from two years ago. Inputs like milk and protein are difficult to offset because the meat business depends on them. Freezing is more complicated because it requires expert temperature controlled transport, says CEO Connolly. “But as we begin to see this latest wave of inflation, we’ve been working on pricing throughout the year. These new pricing measures will take effect in the first quarter of ’23, and are very targeted at frozen and protein snacks.”
CAG opportunistic pullback level
Using rifle charts in weekly and daily time frames, CAG provides an accurate view of the landscape for stock. The weekly rifle chart has reached close to 35.88 Fibonacci (Five) layer. Weekly rifle chart downtrend is suspended in income bounce because weekly 5-period moving average (MA) flats over $ 32.66, weekly 200-period MA $ 32.65 and 15-period MA $ 34.27 overlap at $ 34MA43d. . The weekly stochastic stalls up in the 40-band or triggers a small reverse puppy. Weekly Lower Market Structure (MSL) Purchase triggers a breakout through $ 32.24. Weekly Upper Bollinger Bands (BBs) overlap the $ 38.14 fib level. The Daily Rifle Chart is on a grinding uptrend with stalls at 5-period MA $ 34.30 and stalls at 200-period MA $ 33.62 and 200-period MA $ 33.62. The daily 15-period MA is rising at $ 33.36 as the stochastic 80-band test falls. Needless to say, there is a cluster of support and resistance in the পরিস 34.35 to $ 32.65 price range. Wise investors can look for opportunistic pullback levels at $ 33.62 daily 200-period MA, $ 32.24 weekly MSL trigger, $ 31.30 fib, $ 30.03 fib, $ 29.48, $ 28.92 fib, and $ 27.06 fib levels. Upside trajectories range from $ 38.14 fib level to $ 45.36 fib level.
