Conagra Shares Surge As Nationwide Lockdown Prompts Americans To Stockpile Groceries

Shares of Conagra rose almost 4% on Tuesday and will likely continue to be volatile as the coronavirus pandemic prompts a nation full of locked down consumers without access to restaurants to make more trips to the food store than usual. 

Since March 12, however, the company’s stock is up more than 20%, according to Yahoo. Not unlike stay-at-home software names and online retailers, Conagra appears to be one of the few stocks getting a tailwind from the coronavirus outbreak. 

Demand for the company’s brands, which include staple snack and read-to-eat names like Birds Eye, Udi’s and Vlasic, is on the rise as Americans rush to their local groceries to stockpile as much food as they can.

And with the President extending the nation’s social distancing guidelines to the end of April, it’s looking as though the tailwind can continue heading into the spring. Some analysts are predicting that social distancing guidelines could continue even further, into the beginning of summer.

Conagra said during Tuesday’s earnings report that it has witnessed a “significant increase” in demand for its fourth quarter and that it expects improved top and bottom line numbers. It also boosted its full year guidance expectations.

For its fiscal year 2020, the company projects adjusted earnings from continuing operations to be above the high end of prior range of $2.00 to $2.07 per share. 

“On a quarter-to-date basis, shipments and consumption in our domestic retail business have increased by about half, more than offsetting the effect of worsening trends in our food-service business,” CEO Sean Connolly said.

These gains will help offset what is expected to be a 50% to 60% slowdown in the company’s Foodservice sales. 

Previously, the company had been mired by a slowdown in revenue and earnings that had caused it to lower estimates less than two months ago in February. Those worries have now been forgotten. The company now says it expects a more than 50% gain in domestic retail sales for its fourth quarter and says its supply chain has “effectively serviced demand” throughout the pandemic crisis so far.

Furthermore, surging food stocks were one leg of the “Virus fear” trade that, despite last week’s easing, remains a winner in the last month…