Bear of the Day: Conagra (CAG)

Conagra Brands, Inc. CAG is facing a challenging environment due to a slowdown in consumer spending, elevated inflation and tariffs. This Zacks Rank #5 (Strong Sell) is near a 5-year low.

Conagra is a food company that is headquartered in Chicago. For over 100 years, it has been making food. Its brands include Birds Eye, Duncan Hines, Healthy Choice, Marie Callender’s, Reddi-wip, Slim Jim, Angie’s BOOMCHICKAPOP, and many others.

Conagra Beat in the Second Quarter of Fiscal 2026

On Dec 19, 2025, Conagra reported its second quarter fiscal 2026 results and beat on the Zacks Consensus by a penny. Earnings were $0.45 versus the Zacks Consensus of $0.44. It was the second earnings beat in a row.

However, the business remained challenged.

Net sales fell 6.8% with organic net sales decreasing 3.0%. But the company was optimistic that it would see a return to net sales growth in the second half of the fiscal year due to some building momentum.

Conagra Reaffirmed the Fiscal 2026 Guidance

Conagra was hopeful of better days ahead. It reaffirmed its prior fiscal 2026 guidance of organic net sales change of a loss of 1% to 1% compared to fiscal 2025.

Earnings are expected to be between $1.70 and $1.85.

The company expects costs of goods sold inflation to continue at an elevated level this fiscal year. Guidance anticipates core inflation slightly higher than 4%.

In addition, the company is still seeing impacts from previously announced U.S. tariffs. Combined, all the tariffs are expected to increase the cost of goods by 3% prior to mitigations.

In total, Conagra expects total cost of goods inflation to be 7% in fiscal 2026.

Analysts Cut Fiscal 2026 and 2027 Earnings Estimates

Even though the company reaffirmed its fiscal 2026 guidance, the analysts were still cutting over the last month.

7 estimates were cut over the last 30 days, with the Zacks Consensus falling to $1.72 from $1.75. This is at the lower end of Conagra’s guidance range. It’s an earnings decline of 25.2%.

This will be the second year in a row with declining earnings.

6 estimates were also cut for fiscal 2027 in the last month. The Zacks Consensus fell to $1.79 from $1.86. That is earnings growth of 4.2%.

When earnings estimates are cut by this many analysts at the same time, you often get a Zacks Rank (Strong Sell) stock.

Here’s what it looks like on the chart.

Shares of CAG Sink Over the Last Year

Conagra shares have sunk over the last year and are now near 5-year lows.

Is it cheap?

Conagra trades with a forward price-to-earnings (P/E) ratio of just 9.6. A P/E ratio under 10 usually means a company is dirt cheap.

Conagra also pays a dividend which is $1.40 per share. That’s a yield of 8.5%. Is it safe? Will they continue to pay it?

In the first half of fiscal 2026, Conagra generated $331 million in net cash flows from operating activities compared to $754 million in the prior year period. The company’s free cash flow decreased from the prior year by $426 million to $113 million.

Dividends paid through the first half were flat year over year at $335 million.

But until the business turns around, the shares may struggle. Investors might want to watch the earnings estimates for higher revisions.

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This article originally published on Zacks Investment Research (zacks.com).

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