Is Nomad Foods' Pricing Power Enough to Offset Protein Costs?

Nomad Foods Limited NOMD is contending with mounting input cost pressures, particularly in protein categories like chicken and red meat. In the first quarter of 2025, the company flagged a rise in protein inflation, attributed to both heightened demand and what it referred to as Asian flu-related disruptions in Europe. These cost increases come as Nomad maintains a significant portfolio exposure to lean proteins, a key element of its frozen food offerings.

The bigger concern lies in Nomad’s ability to keep pace with these rising costs through pricing. Management indicated that pricing actions are underway but expected to be gradual, with implementation likely to lag cost inflation in the near term. Although gross margin expanded 90 basis points year over year to 27.8% in the first quarter of 2025, adjusted EBITDA declined 1.8%, reflecting early signs of margin pressure. The updated guidance for 2025 also indicates a lower adjusted EBITDA growth range of 0% to 2%, revised downward from the prior band of 2-4%.

While Nomad Foods notes a track record of pricing to recover cost increases, prolonged inflation in protein inputs could further test consumer elasticity, especially amid value-seeking behavior in key markets like the United Kingdom. As the company balances cost recovery with demand retention, its ability to manage near-term inflation without compromising volume or competitive position will remain a critical factor. Maintaining brand strength while offsetting margin pressure will be key in the quarters ahead.

How NOMD’s Peers Navigate Rising Costs

Like Nomad Foods, Conagra Brands CAG and Lamb Weston LW are managing inflationary pressures and shifting consumer demand. 

Conagra continues to face elevated protein and input costs, which contributed to a 389-basis-point adjusted gross margin decline in the third quarter of fiscal 2025. The company is focusing on portfolio restructuring, divesting lower-growth assets and investing in high-margin categories like snacks to offset margin pressure.

Meanwhile, Lamb Weston is emphasizing cost efficiency and operational restructuring. The company reported 9% global volume growth in the third quarter of fiscal 2025 and is executing more than 30 strategic projects for fiscal 2025, even as its price/mix declined 5% due to strategic pricing adjustments. Lamb Weston aims to drive profitability through network optimization and new customer wins across international and foodservice channels.

NOMD’s Price Performance, Valuation and Estimates

Shares of Nomad Foods have lost around 5.5% in the past month compared with the industry’s decline of 1.7%.

From a valuation standpoint, NOMD trades at a forward price-to-earnings ratio of 7.89X, down from the industry’s average of 15.77X.

The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings per share implies year-over-year growth of 4.6% and 7.3%, respectively. 

NOMD stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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