Scouting Report: What to Expect From 1Q

CAG is scheduled to report 1Q27 EPS next Wednesday (9/30) before the open. Since the last print, our conversations suggest sentiment remains mixed, with the stock underperforming the XLP by -5.2% MTD as investors focus on an increasingly volatile cost environment for CAG and the broader Packaged Food sector. While we expect quarterly results to be broadly in line with expectations, attention is likely to center on the FY27 outlook. Although we think the outlook was partially de-risked last quarter on the top line given what many viewed as aggressive elasticity assumptions, inflation concerns have moved to the forefront and tracked trends remain weak, leading some investors to question whether current guidance fully reflects the operating environment. While valuation screens attractive on both an absolute and relative basis versus LT historical averages, we would remain on the sidelines until there is greater visibility into an improvement in operating conditions. We expect CAG to reite