(Reuters) - Conagra Brands Inc (CAG.N) beat Wall Street’s second-quarter profit and sales estimates on Thursday, benefiting from strong demand for the packaged food maker’s snacks and frozen foods, pushing its shares up 18% and setting them up for their best day ever.
Conagra has been pouring money into innovating its brands including Hunt’s and Chef Boyardee and partnering with retail outlets to increase shelf space for its products.
The latest results showed the company has also largely recovered from its initial hiccup in integrating brands including Birds Eye and Duncan Hines that it bought as part of the Pinnacle Foods acquisition last year.
“Conagra’s innovations, both with its legacy brands and brands from the recent Pinnacle acquisition, along with business improvements the company has made, are beginning to shine through,” Edward Jones analyst John Boylan said.
“Any doubts investors may have had about Conagra’s prospects for this fiscal year were likely erased with these results.”
The Chicago, Illinois-based company raised its forecast for annual cost synergies for its Pinnacle acquisition by $20 million to $305 million by the end of fiscal 2022, and said it planned to invest the savings to drive sales.
Conagra’s most profitable grocery and snacks segment’s quarterly sales grew 14.2%, with Conagra citing strong demand for products such as Slim Jim and Swiss Miss.
Its refrigerated and frozen food unit grew 28.8%, benefiting from strong sales for brands including Birds Eye, Healthy Choice and Marie Callender’s.
Excluding items, the company earned 63 cents per share, beating the average analysts’ estimate of 57 cents, according to IBES data from Refinitiv.
Net income attributable to Conagra nearly doubled to $260.5 million, or 53 cents per share, in the quarter ended Nov. 24, from a year earlier.
Net sales rose 18% to $2.82 billion, largely due to Conagra’s acquisition of Pinnacle last year, beating the average analysts’ estimate of $2.80 billion, marking its first quarterly beat in over a year.
The company, however, cut its annual forecast for net sales growth and profit, mainly to reflect the sale of its direct-store-delivery snacks business in October.
Shares of the company, which have risen 36% this year, were up at $34.48.
Reporting by Praveen Paramasivam in Bengaluru; Editing by Vinay Dwivedi