Upcoming AWS Coverage on Hostess Brands Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 5, 2017 / Active Wall St. announces its post-earnings coverage on Conagra Brands, Inc. (NYSE: CAG). The Company released its financial results for the third quarter fiscal 2017 (Q3 FY17) on March 23, 2017. The Chicago, Illinois-based Company's GAAP gross margin and adjusted gross margin expanded 310 and 180 basis points y-o-y, respectively. Register with us now for your free membership at:

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One of Conagra Brands' competitors within the Processed & Packaged Goods space, Hostess Brands, Inc. (NASDAQ: TWNK), reported on March 14, 2017, its financial results for Q4 and full year ended December 31, 2016. AWS will be initiating a research report on Hostess Brands in the coming days.

Today, AWS is promoting its earnings coverage on CAG; touching on TWNK. Get our free coverage by signing up to

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Earnings Reviewed

For the three months ended on February 26, 2017, Conagra reported net sales of $1.98 billion, which came in 9.9% below the $2.20 billion recorded at the end of Q3 FY16. Net sales numbers for the reported quarter fell marginally short of market expectation of $1.99 billion. The Company's net sales excluding the impacts of divestitures and foreign exchange was down by 4.8%, primarily driven by the Company's continued progress in building a higher quality net sales base.

The packaged food maker's Q3 FY17 income from continuing operations surged to $179.5 million, or $0.41 per diluted share, from $71.4 million, or $0.16 per diluted share, in Q3 FY16. The Company's adjusted EPS from continuing operations for Q3 FY17 came in at $0.48 per diluted share, rising 37.1% from $0.35 per diluted share reported in the prior year's same period. Meanwhile, Wall Street had expected the Company to reported adjusted EPS from continuing operations of $0.45 per diluted share.

Operating Metrics

Gross profit for Q3 FY17 stood at $621.0 million, or 31.3% of net sales, compared to $619.8 million, or 28.2% of net sales, the previous year's comparable period. Furthermore, adjusted gross profit margin for Q3 FY17 was $625.2 million, or 31.6% of net sales, compared to $653.9 million, or 29.7% of net sales, in Q3 FY16.

In Q3 FY17, Conagra spent $349.7 million as selling, general, and administrative expenses compared to $447.0 million in Q3 FY16. The Company posted income from continuing operations before income taxes and equity method investment earnings of $225.6 million in Q3 FY17 compared to $96.4 million in last year's corresponding period.

Segment Performance

During Q3 FY17, Grocery & Snacks segment's net sales came in at $849.8 million, down 5.4% from $898.0 million in the year ago same period. The segment's Q3 FY17 operating profit rose 31.6% to $201.9 million from $153.4 million in Q3 FY16. Additionally, the segment's adjusted operating profit margins rose 7.9% to $212.1 million in Q3 FY17 from $196.6 million in Q3 FY16.

Conagra's Refrigerated & Frozen segment's net sales was $666.4 million in Q3 FY17, which was 6.0% less than last year's recorded net sales numbers of $708.9 million. During the reported quarter, the segment's operating profit grew 10.4% to $128.9 million from $116.8 million in Q3 FY16. The segment's adjusted operating profit stood at $127.8 million in Q3 FY17 versus $121.6 million in Q3 FY16.

International segment contributed $205.2 million to the Company's total sales in Q3 FY17 compared to $211.6 million in Q3 FY16. The segment's operating profit rose 10.4% to $18.1 million in Q3 FY17 from $16.4 million in the prior year's same quarter. Moreover, the segment's adjusted operating profit for Q3 FY17 came in at $17.8 million versus $16.6 million in Q3 FY16.

The Company's Foodservice segment reported sales of $259.8 million in Q3 FY17, falling 2.6% from $266.6 million in Q3 FY16. In the reported quarter, the segment's operating was $27.8 million compared to $27.9 million in Q3 FY16.

Cash Flow & Balance Sheet

In thirty-nine weeks ended February 26, 2017, Conagra generated $803.5 million as net cash from continuing operations compared to $274.3 million in the year ago same period. The Company had cash and cash equivalents balance of $683.6 million as on February 26, 2017, compared to $798.1 million, at the close of books on May 29, 2016. Furthermore, the Company ended the quarter with senior long-term debt of $2.65 billion compared to $4.69 billion as on May 29, 2016.

Dividend

In a separate press release on April 03, 2017, Conagra's Board of Directors declared a quarterly dividend payment of $0.20 per share, payable on May 30, 2017, to stockholders of record as of the close of business on April 28, 2017.

Outlook

Conagra updated its guidance for full year FY17, with net sales (excluding the impacts of divestitures and foreign exchange) forecasted to be at or slightly below the low-end of the range of down 4% to 5%. Adjusted gross margin is anticipated to be within range of 30.4% to 30.6%; while adjusted operating margin is expected to be slightly above the range of 15.3% to 15.5%. Furthermore, adjusted diluted EPS is forecasted to be at or slightly above the high-end of the $1.65 to $1.70 range.

Stock Performance

On Tuesday, April 04, 2017, Conagra Brands's stock is trading slightly down by 0.32%, closing Tuesday's session at $40.22 on volume of 2.00 million shares. The company's shares gained 2.22% since the beginning of the year. Additionally, the stock has surged 9.87% in the last six months. The Company's shares are trading at a PE ratio of 39.82 and have a dividend yield of 1.99%. At Tuesday's closing price, the stock's net capitalization stands at $17.64 billion.

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SOURCE: Active Wall Street