Why Conagra Stock Tumbled by Nearly 6% on Tuesday

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Why Conagra Stock Tumbled by Nearly 6% on Tuesday

The market didn’t find the stock of Conagra Brands (NYSE: CAG) very tasty on the first trading day of the week after the holiday weekend. On the back of significantly lowered guidance, investors collectively traded out of the veteran packaged foods company to the point where the shares lost almost 6% of their value. And this was on a day when the S&P 500 (SNPINDEX: ^GSPC) landed in positive territory, with a 0.2% rise.

Conagra revealed the new

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for its fiscal 2025, and it’s no wonder investors found it wanting. The company now believes its organic sales will fall by roughly 2% compared to the previous fiscal year; formerly, it was guiding for a decline of only around 0.7% to 0.8%.

It also shaved its forecast for

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(generally accepted accounting principles) adjusted earnings per share. Management is now modeling approximately $2.35 per share for the *******, where before it expected $2.45 to $2.50. By comparison, the fiscal 2024 result was $2.67.

In its update, Conagra attributed the lowered guidance to “customer service interruptions.” These were due, the company said, to supply constraints on a pair of key frozen meal product categories: chicken and frozen vegetables. It added that foreign exchange rates are also expected to weigh negatively on results.

In the

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, Conagra quoted CEO Sean Connolly as saying that his company is still “pleased with the strong and consistently improving demand we have experienced this year.”

“While we’ve faced recent challenges servicing that demand, our investments in infrastructure and strategic partnerships position us for long-term success,” he added.

Conagra’s headwinds are hardly its own fault, so investors might have been somewhat harsh with their sell-off. Regardless, an deeper-than-expected revenue slump and eroding profitability are hardly encouraging developments. Investors will want to see a more concrete strategy for reversing those trends.

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has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a

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was originally published by The Motley Fool

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#Conagra #Stock #Tumbled #Tuesday

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