CAG Reports Q1 2026 Adjusted EPS Decreased by 26.4%, Reaffirming Fiscal 2026 Guidance

Conagra Brands (CAG.US) reported its first quarter fiscal year 2026 results, with adjusted diluted earnings per share (EPS) at $0.39, representing a 26.4% decrease compared to $0.53 in the prior year period. This figure beat the analyst EPS estimate of $0.33. Net sales for the quarter decreased by 5.8% to $2.6 billion. Despite these results, the company reaffirmed its fiscal 2026 guidance.

Segment Performance

The Grocery & Snacks segment experienced an 8.7% decrease in net sales to $1.1 billion, primarily due to a 7.7% unfavorable impact from mergers and acquisitions and a 1.0% decrease in organic net sales. Adjusted operating profit for this segment decreased by 12.9%.

Conversely, the Refrigerated & Frozen segment saw a slight increase in organic net sales of 0.2%, with total net sales decreasing 0.9% to $1.1 billion. The organic net sales growth was driven by a 0.5% increase in volume, partially offset by a 0.3% decrease in price/mix. However, adjusted operating profit for this segment decreased significantly by 28.1%, impacted by cost of goods sold inflation and unfavorable operating leverage.

Management Outlook and Strategic Focus

Conagra Brands is reaffirming its fiscal 2026 guidance, expecting organic net sales growth between (1)% and 1% compared to fiscal 2025. The company projects adjusted operating margin to be between ~11.0% and ~11.5%, and adjusted EPS between $1.70 and $1.85. Management highlighted solid progress in the first quarter with top-line improvement and continued strategic execution across the portfolio, including fully restored service levels and reduced net debt.

The company anticipates continued elevated cost of goods sold inflation in fiscal 2026, with core inflation slightly higher than 4%. Additionally, fiscal 2026 is expected to be impacted by previously announced U.S. tariffs, which could increase cost of goods sold by approximately 3% annually. Conagra Brands plans to mitigate these impacts through accelerated cost savings initiatives, sourcing alternatives, and targeted pricing actions.