Conagra Brands Inc (NYSE:CAG) stock fell 2.69% (As on July 11, 11:18:16 AM UTC-4, Source: Google Finance) after the company missed analyst expectations for its fourth quarter and issued weaker-than-expected guidance for fiscal 2026. Organic net sales decreased 3.5% in the quarter, driven by a 1% negative impact from price/mix and a 2.5% decrease in volume. Gross profit decreased 12.1% to $707 million in the quarter and adjusted gross profit decreased 10.7% to $717 million versus the prior year as productivity was more than offset by lower net sales, the negative impact of cost of goods sold inflation, and unfavorable operating leverage. Gross margin decreased 228 basis points to 25.4% in the quarter, and adjusted gross margin decreased 184 basis points to 25.8%. Adjusted net income attributable to Conagra Brands was $270 million. For the full fiscal year, the company generated $1.7 billion in net cash flows from operating activities compared to $2.0 billion in the prior year period. Capital expenditures were $389 million compared to $388 million in the prior year period, and free cash flow was $1.3 billion compared to $1.6 billion in the prior year.

Moreover, net sales for the Grocery & Snacks segment decreased 2.1% to $1.2 billion in the quarter. Reported and organic net sales for the Refrigerated & Frozen segment decreased 4.4% to $1.1 billion in the quarter driven by a price/mix decrease of 2.3% and a volume decrease of 2.1%. Net sales for the International segment decreased 13.8% to $230 million in the quarter. Net sales for the Foodservice segment decreased 4.0% to $280 million in the quarter.

CAG in the fourth quarter of FY25 has reported the adjusted earnings per share of 56 cents, missing the analysts’ estimates for the adjusted earnings per share of 59 cents. The company had reported the adjusted revenue decline of 4.3 percent to $2.78 billion in the fourth quarter of FY25, missing the analysts’ estimates for revenue of $2.85 billion.

For fiscal 2026, Conagra provided disappointing guidance, projecting adjusted EPS of $1.70 to $1.85, significantly below the analyst consensus of $2.19. The company expects organic net sales growth between -1% and 1% compared to fiscal 2025, with adjusted operating margin between approximately 11.0% and 11.5%. The company cited continued inflationary pressures as a major headwind for the upcoming fiscal year, expecting core inflation of approximately 4%. Additionally, Conagra anticipates a significant impact from recently announced U.S. tariffs, which could increase cost of goods sold by approximately 3% annually before mitigating actions.