RBC Maintains Neutral View on Conagra (CAG) as Q4 Miss Highlights Growth Pressures

Conagra Brands Inc. (NYSE:CAG) is one of the most oversold S&P 500 stocks so far in 2025. The stock has declined around 30%–32% both YTD and over the past year, largely reflecting broader consumer weakness and persistent inflation, which continue to cloud the outlook for packaged food companies.

Investor sentiment took a further hit following the company’s Q4 FY 2025 results (fiscal year ended May), released on July 10. The numbers confirmed ongoing softness: net sales dropped 4.3% year-over-year, with organic sales falling 3.5%. While lower volumes were the primary driver of this decline, unfavorable price/mix also played a part.

A busy supermarket with shelves full of packaged foods.

Margins came under pressure, too. Adjusted operating margin contracted by 100 basis points to 13.8%, contributing to an 8% year-over-year decline in earnings per share, which came in at $0.56.

Reacting to the results, RBC Capital’s Nik Modi lowered Conagra’s price target from $25 to $22, maintaining a Sector Perform rating. In his note to clients, Modi acknowledged the firm’s Q4 miss and called attention to a cautious FY 2026 outlook, shaped by ongoing cost inflation and the impact of tariffs.

Interestingly, Conagra appears to be leaning into the downturn by continuing to invest in its brands, improving supply chain flexibility, and supporting volume recovery, despite the near-term strain this puts on margins and sentiment. According to Modi, these investments are critical for rebuilding momentum, even if they come at a short-term cost.

The market may remain cautious in the near term, but it may stabilize and recover depending on how effectively Conagra navigates these headwinds and how soon its investments begin to yield results.

Conagra Brands Inc. (NYSE:CAG) is one of North America’s leading branded food companies with a portfolio that includes brands such as Birds Eye, Duncan Hines, Healthy Choice, Marie Callender’s, Reddi-wip, and Slim Jim.

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Disclosure: None. This article is originally published at Insider Monkey.