CAG Q3 Deep Dive: Product Mix, Supply Chain Recovery, and Strategic Pricing Shape Results

October 06, 2025 at 09:15 AM EDT

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Packaged foods company Conagra Brands (NYSE: CAG) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 5.8% year on year to $2.63 billion. Its non-GAAP profit of $0.39 per share was 17.4% above analysts’ consensus estimates.

Is now the time to buy CAG? Find out in our full research report (it’s free for active Edge members).

Conagra (CAG) Q3 CY2025 Highlights:

Revenue: $2.63 billion vs analyst estimates of $2.61 billion (5.8% year-on-year decline, 0.7% beat)
Adjusted EPS: $0.39 vs analyst estimates of $0.33 (17.4% beat)
Adjusted EBITDA: $406 million vs analyst estimates of $371.7 million (15.4% margin, 9.2% beat)
Management reiterated its full-year Adjusted EPS guidance of $1.78 at the midpoint
Operating Margin: 13.2%, down from 14.4% in the same quarter last year
Organic Revenue was flat year on year vs analyst estimates of 1.9% declines (128.6 basis point beat)
Sales Volumes fell 1.2% year on year, in line with the same quarter last year
Market Capitalization: $9.14 billion

StockStory’s Take

Conagra’s third quarter saw a positive market response as the company exceeded Wall Street’s revenue and profit expectations despite reporting a year-on-year revenue decline. Leadership attributed the quarter’s outperformance to improved supply chain execution and strategic brand investments that supported volume recovery, especially in the frozen and staples portfolios. CEO Sean Connolly pointed to normalized service levels and restored merchandising activity as key factors, noting, “We’re getting products back on shelves, and consumers are responding.” Management also highlighted the successful completion of divestitures, which reduced net debt and streamlined the brand portfolio.

Looking ahead, Conagra’s guidance relies on continued progress in its frozen and snacks segments, targeted pricing actions, and productivity gains to navigate persistent inflation and tariffs. Management expects inflation pressures, particularly in proteins and packaging, to persist but believes higher productivity and tariff mitigation will help contain margin impacts. CFO Dave Marberger cautioned that elevated input costs and consumer value-seeking behavior will remain headwinds, but reaffirmed the company’s commitment to disciplined capital allocation and investment in supply chain modernization, stating, “Our strategic priorities for the year remain unchanged.”

Key Insights from Management’s Remarks

Management credited improved supply chain reliability, targeted pricing actions, and portfolio simplification through divestitures as central to this quarter’s performance and the company’s strategic direction.

Supply chain normalization: Service levels reached 98%, enabling better product availability across frozen and staples categories, which management identified as critical to supporting in-market volume recovery after prior supply disruptions.
Strategic brand investments: Increased marketing and merchandising activities, especially in frozen, contributed to share gains for products like frozen vegetables and meals. Management said restored promotional support is “translating into improved in-market performance.”
Snacks segment dynamics: Strong volume growth in protein snacks (meat snacks up 4%, seeds up 2%) was partially offset by timing shifts in promotions and price-related declines in salty and sweet snacks. The company expects the impact from these promotional shifts to balance out in future quarters.
Portfolio simplification: Conagra completed the divestiture of brands such as Chef Boyardee and frozen seafood, using proceeds to reduce net debt by over $400 million. Management signaled continued focus on portfolio optimization to drive efficiency and capital allocation.
Inflation and tariff management: Productivity gains and tariff mitigation efforts offset some cost pressures, though protein inflation and tariffs on steel, aluminum, and China-sourced goods remained significant headwinds. Management noted these factors continue to affect cost of goods sold and operating margins.

Drivers of Future Performance

Conagra’s outlook is shaped by ongoing inflation and tariff pressures, with management aiming to offset these headwinds through targeted pricing, productivity improvements, and focused investments in core categories.

Pricing and productivity actions: Targeted price increases in canned goods and select sweet treats are planned to address sustained input inflation, particularly in proteins and cocoa. Management expects productivity initiatives—including supply chain modernization—to deliver cost savings that partially offset higher costs.
Frozen and snacks growth priorities: The company intends to boost advertising and innovation in frozen and snacks, viewing these segments as central to future volume and share gains. Investments in merchandising and new product formats are expected to support this growth focus.
Consumer and macro risks: Persistent weak consumer sentiment and value-seeking behavior are expected to pressure volumes and margins, especially as elasticity effects from price hikes play out. Management also cited continued uncertainty around tariff policy and inflation as ongoing risks to margin targets.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will watch (1) progress in restoring volume momentum in frozen and snacks as promotions and supply chain improvements take hold; (2) the pace and effectiveness of productivity initiatives and supply chain modernization, especially as input costs remain volatile; and (3) the impact of additional portfolio optimization moves on profitability and balance sheet strength. The ongoing consumer response to targeted price increases will also be a key area of focus.

Conagra currently trades at $19.13, up from $18.28 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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