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Conagra Brands Poised For In-Line Quarter, With Dividend Cut Likely Amid Challenges, RBC Says

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Conagra Brands Poised For In-Line Quarter, With Dividend Cut Likely Amid Challenges, RBC Says

Conagra Brands' (CAG) fiscal fourth-quarter results are largely expected to meet Wall Street's estimates, while the packaged food company could cut its dividend amid a challenging business backdrop, RBC Capital Markets said Thursday.

The brokerage projects Conagra's fourth-quarter earnings to match the Street's consensus of $0.46 a share, while its net sales are pegged at $2.87 billion, compared with the $2.89 billion market consensus. The company is scheduled to report results July 15.

"The bigger story is (fiscal 2027), where limited cost visibility, a difficult pricing environment, and a likely new (chief executive) rebase create a wide range of outcomes," RBC co-head of global consumer and retail research Nik Modi said in a note to clients Thursday. "A dividend cut looks probable and would be welcomed, freeing cash for deleveraging and reinvestment."

In April, Conagra announced the appointment of former J.M. Smucker (SJM) executive John Brase as CEO, replacing Sean Connolly.

Conagra's dividend yield is 10.4%, or 660 basis points, above its historical 10-year average of 3.8%, implying a "high probability" of a reduction, Modi said Thursday. "We believe the market is already pricing in a sizable cut, and a cut would be constructive for the narrative and free up sizable cash to deleverage, reinvest, and/or accelerate portfolio reshaping."

In late March, Conagra announced a quarterly dividend of $0.35 per share.

RBC lowered its price target on the company's stock to $16 from $17, with a sector perform rating.

Conagra shares were up 1.7% in Thursday late-afternoon trade. So far in 2026, the stock has lost 20% in value.

The company is seen posting "modest" organic sales growth that's roughly in-line with market expectations, with limited upside, RBC said. Although Conagra is expected to meet the Street's bottom-line views for the quarter, factors such as inflation are likely to outweigh productivity gains and 53rd-week operating leverage, according to the note.

"(The company) heads into its (fourth-quarter) print and first formal (2027) guide under pressure -- shares have underperformed, (while) estimates have moderated intra-quarter," Modi said.

Price: $13.70, Change: $+0.09, Percent Change: +0.68%

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