Conagra Brands and Lamb Weston reported solid beats for their second quarters early Thursday as pricing actions offset inflationary costs. Both CAG stock and LW stock gapped up on earnings, hitting buy zones and new highs.
Lamb Weston CEO Tom Werner said in the company earnings release that higher pricing to counter input cost inflation would continue to drive financial results in the second half of fiscal 2023.
"Our volume performance will continue to be affected by supply chain constraints and inflationary pressures on consumers," he added.
The Conagra earnings release Thursday also touted "decisive actions to offset inflation."
As recession worries grow, packaged food stocks could offer some shelter from an economic downturn. Consumers generally continue buying food staples even while cutting back on more discretionary items.
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Conagra Earnings
Estimates: Analysts polled by FactSet expected Conagra earnings to rebound 3.5%, year over year, to 66 cents per share. Revenue was seen growing 7.1% to $3.277 billion. That would mark the second straight quarter of slowing earnings growth.
Results: Conagra reported an 26.6% jump in earnings, to 81 cents per share. Revenue climbed 8.3% to $3.31 billion.
Outlook: Analysts project Q3 EPS of 60 cents, up 2.7%. They forecast full-year Conagra earnings of $2.47 per share, up 4.5%.
CAG Stock
Shares of Conagra gapped up 3.4% to 39.97 Thursday, hitting a new 52-week high of 40.78 intraday. CAG stock shows a 37.07 buy point off an irregular pattern, as well as a 36.94 alternative entry, according to MarketSmith chart analysis. Shares remain well above a rising 50-day moving average and also above the 200-day average, after a strong rally since November.
Bear in mind that the market is in a correction, making new stock buys a highly risky prospect.
The relative strength line for CAG stock has risen to highs.
An 89 Relative Strength Rating means that Conagra stock has outperformed 89% of all stocks in IBD's database over the past year.
The Chicago-based company owns well-loved frozen-food brands, such as Birds Eye, Marie Callender's and Healthy Choice.
Lamb Weston Earnings
Estimates: Analysts polled by Zacks projected Lamb Weston earnings of 74 cents per share, up 48% year over year. Revenue was seen growing 15.2% to $1.16 billion.
Results: Lamb Weston turned in a 156% earnings gain, to $1.28 per share. Sales rose nearly 27%, to $1.28 billion.
Outlook: Analysts forecast Q3 EPS of 75 cents, up 3.2%. They see full-year EPS of $3.02, up 45.3%.
LW Stock
Shares of Lamb Weston leapt 9.8% to 96.03 Thursday, notching a new 52-week high of 96.87 intraday. LW stock reclaimed an 88.14 flat-base buy point.
A 94 Relative Strength Rating means that Lamb Weston stock has outperformed 94% of all stocks in IBD's database over the past year.
The Eagle, Idaho-based company is a leading supplier of frozen potato, appetizer and vegetable products to restaurants and retailers.
Also on Thursday, packaged food peer Simply Good Foods posted a 2% earnings decline but edged past estimates. SMPL stock dived 8.7% Thursday.
