Conagra (CAG) Stock Drops 5% After Slashing Dividend in Half and Missing Profit Outlook

TLDR

• Conagra cut its annual dividend by 50%, from $1.40 to $0.70 per share
• FY2027 EPS guidance of $1.40–$1.50 came in below the $1.59 analyst estimate
• The company took a $2 billion impairment charge, resulting in a $1.6 billion net loss for the quarter
• Organic net sales are expected to decline 1%–3% in FY2027, worse than the 0.4% drop in FY2026
• CAG stock was down roughly 4%–5.5% in premarket trading and has lost about 18% year-to-date

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Conagra Brands (CAG) reported its fiscal Q4 and full-year 2026 results on Wednesday, and the market didn’t like what it saw. The stock dropped around 5.5% in premarket trading to $13.37, putting it near the lower end of its 52-week range of $12.53 to $20.32.

Conagra Brands, Inc., CAG

The quarterly numbers were actually fine on the surface. Adjusted EPS came in at $0.47, a penny above estimates. Net sales were $2.88 billion, just under the $2.89 billion consensus. But that’s not what investors were focused on.

The headline that stung was the dividend cut. Conagra slashed its annualized payout in half, from $1.40 to $0.70 per share. The company had paid dividends for 51 consecutive years, making this a notable break from tradition.

CONAGRA BRANDS $CAG EARNINGS ARE OUT!
🟢 EPS: $0.47 | Est. $0.47
🔴 REV: $2.88B | Est. $2.89B
IMPLIED MOVE TODAY: ±6.44%!! pic.twitter.com/y484Nes6ew

— Schaeffer’s Investment Research (@schaeffers) July 15, 2026

New CEO John Brase, who took the helm in June, framed the move as a reset. The cut is expected to free up around $335 million in annual cash flow, which will go toward debt reduction and capital investment.

Weak Guidance Weighs on Sentiment

The FY2027 outlook added to the pressure. Conagra guided for adjusted EPS of $1.40 to $1.50, below the $1.59 Wall Street was expecting. Organic net sales are projected to fall between 1% and 3%, steeper than the 0.4% decline seen in FY2026.

Adjusted operating margin is expected to compress further, to a range of 10.0%–10.5%, down from 11.3% in FY2026. The company is dealing with inflation running at 5–6%, including tariff impacts on beef, steel, and aluminum used in packaging.

The first quarter of FY2027 is expected to be the toughest stretch, with low-single-digit organic sales declines and adjusted operating margin in the high-single digits. About $40 million in tariff costs are front-loaded into Q1.

The full-year net leverage ratio is projected at around 4.0x before the company works it down toward its 3.0x target in later years.

A $2 Billion Charge and a Strategic Reset

Conagra also booked a $2 billion impairment charge in the quarter, tied to the prolonged decline in its stock price and market value. That pushed the net loss to $1.6 billion for Q4.

For the full fiscal year 2026, adjusted EPS came in at $1.72, a 25.2% decline year-over-year, though it landed within the company’s original guidance range. Free cash flow conversion was strong at 119%, though absolute free cash flow dropped 24.9% to $979 million.

Brase outlined four strategic priorities: stabilizing margins, increasing brand investment, simplifying the portfolio, and resetting capital allocation. Advertising and promotion spending is set to rise to roughly 3% of net sales in FY2027, a 14% increase year-over-year.

Capital expenditures are planned at around $550 million for FY2027, up from $423 million in FY2026, with a focus on supply chain modernization.

Consumer pressure from store-brand competition continues to weigh on volumes. The company noted that shoppers dealing with inflation, particularly at the gas pump, have been trading down.

CAG stock has lost about 18% of its value since the start of 2026.