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How Much Upside Does ConAgra Stock Have on Earnings Beat?

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ConAgra Brands (CAG) is rallying 4.7% to $31.30, hitting fresh 2019 highs, in Thursday’s trading session.

The move comes after better-than-expected fiscal first-quarter earnings results. The question now becomes, are the results good enough to justify a continued rally in the stock price?

Earnings of 43 cents per share came in 5 cents ahead of expectations. However, revenue of $2.39 billion missed analysts’ expectations by $90 million, despite growing 30.6% year-over-year.

However, management’s full-year outlook edged consensus expectations. The company is looking for revenue growth between 13.5% and 14.5%, ahead of analysts’ estimates for 13.4% growth. For earnings, management expects profit between $2.08 and $2.18 per share, with the midpoint coming in ahead of consensus estimates at $2.09 per share.

So again we ask, is it enough to drive ConAgra stock higher?

Trading ConAgra Stock

Daily chart of ConAgra stock.
Daily chart of ConAgra stock.

ConAgra stock’s 4%+ rally is a big move, even if it doesn’t look like it on paper. While it may not be a big gain for the day, it propels the stock over uptrend resistance (blue line), the 38.2% retracement at $30.22 and above the prior 2019 high at $30.85.

So long as CAG stock remains above $30 now, bulls can stay long and will likely become dip-buyers if this one can start to trend higher.

On the upside, let’s see if ConAgra stock can continue its post-earnings rally. If so, a run to the 23.6% retracement at $32.70 is the first upside target. Above that, it can continue into the mid-$30s — where it previously topped at in late 2018.

Should support fail and CAG stock break below $30, we need to reconsider some downside targets. The first is the 20-day and 50-day moving average confluence, currently just below $29. There’s also uptrend support in play in that area as well.

If both fail, the 50% retracement currently rests at $28.55. Further, the 61.8% retracement and the 200-day moving average are both near $26.50, should the selling really get aggressive.

Here’s the bottom line: Watch $30. Above it and CAG stock is still OK on the long side. Below warrants more caution.