Research Update: Conagra Brands Inc. Outlook Revised To Stable From Negative; Ratings Affirmed

We expect U.S.-based Conagra Brands Inc. will continue to benefit from demand tailwinds associated with the coronavirus pandemic and weak economic conditions. The packaged food company's credit metrics have improved sequentially, including a significant reduction in adjusted leverage to 4.1x for the fiscal year ended May 31, 2020, compared to 5x in the preceding quarter ended Feb. 23. We believe fiscal 2021 adjusted leverage will remain below our 4.5x downgrade trigger even if adjusted EBITDA misses our forecast by a mid- to high-single-digit percentage rate. We are affirming all of our ratings on the company, including our 'BBB-' issuer credit rating, and revising our outlook to stable from negative. The stable outlook reflects our expectation that solid demand for Conagra's

...- We expect U.S.-based Conagra Brands Inc. will continue to benefit from demand tailwinds associated with the coronavirus pandemic and weak economic conditions. - The packaged food company's credit metrics have improved sequentially, including a significant reduction in adjusted leverage to 4.1x for the fiscal year ended May 31, 2020, compared to 5x in the preceding quarter ended Feb. 23. We believe fiscal 2021 adjusted leverage will remain below our 4.5x downgrade trigger even if adjusted EBITDA misses our forecast by a mid- to high-single-digit percentage rate. - We are affirming all of our ratings on the company, including our '###-' issuer credit rating, and revising our outlook to stable from negative. - The stable outlook reflects our expectation that solid demand for Conagra's value-oriented products will continue for at least the next year given the potential for ongoing coronavirus risk and continued weak economic conditions. We forecast adjusted leverage of around 4x and discretionary...

Research Update