Shares of Conagra Brands (NYSE:CAG) traded down more than 9% on Thursday morning after the food services company reported weaker-than-expected earnings and lowered full-year profit guidance.
Before markets opened on Thursday, Conagra said it had earned $0.36 per share in its fiscal fourth quarter on sales of $2.61 billion, falling short of consensus expectations for $0.41 per share in earnings on revenue of $2.66 billion.
CEO Sean Connolly in a statement blamed the miss on "transitory events," including "intensified promotional competition in certain categories, several isolated manufacturing-related challenges, and weak performance in our Ardent Mills joint venture."
The company is also in the process of integrating Pinnacle Foods, which it bought last October.
ConAgra also cut its full-year fiscal 2020 adjusted earnings guidance to $2.08 to $2.18 per share, down from $2.10 to $2.20, in part to reflect the company's divestiture of its Gelit frozen pasta business. Analysts had been expecting $2.16 per share in earnings.
ConAgra said it sees reported net sales growth of 13.5% to 14% in fiscal 2020, driven by strong consumption trends in the frozen and snacks businesses. Connolly said the Pinnacle integration is going according to plan and should help spark growth in years to come, including helping in the red-hot meat substitute area.
"With a multi-year innovation pipeline now in place for the Pinnacle portfolio, and more opportunity in plant-based meat alternatives than previously forecasted, we are as optimistic as ever about the long-term value creation potential of the acquisition," he said.
ConAgra shares dropped 44% in 2018, and even after Thursday's fall are still up more than 20% year to date. The company seems to be moving in the right direction, but the quarterly results were a reminder to investors not to get ahead of themselves when buying into a recovery.