Delta and Conagra earnings to gauge consumer resilience amid trade challenges

As Delta Air Lines (DAL) and Conagra Brands (CAG) prepare to unveil their earnings reports on July 10, 2025, all eyes are on these results to shed light on consumer and business behavior within a complex economic environment. Against the backdrop of trade policy uncertainties, inflationary pressures, and changing spending patterns, these earnings could offer insights into sector shifts, Federal Reserve expectations, and the potential investment opportunities or risks in consumer discretionary and transportation stocks.

Delta Air Lines: Navigating Uneven Terrain in Travel Trends

Expectations for Delta’s Q2 2025 earnings point to an anticipated EPS of $1.97, representing a year-over-year decrease of 16.5%. However, Zacks’ Earnings Surprise Potential (ESP) model projects a 70% likelihood of surpassing estimates. This optimism stems from Delta’s track record of outperforming expectations in two of the last four quarters, including an impressive 15% beat in Q1 2025. Yet, the narrative surrounding Delta is not uniform:

Regional Disparities: While the Pacific (+9.4%) and Latin America (+4.4%) regions have seen revenue growth, the Atlantic region experienced a 5.7% decline due to capacity reductions and geopolitical uncertainties. This divergence may indicate broader trade policy risks, especially in light of ongoing US-EU tensions.

Cost Management: Delta’s unit cost (excluding fuel) decreased by 5.7% year-over-year in Q1, demonstrating a discipline that could help offset revenue challenges. Nevertheless, elevated fuel prices and potential reductions in business travel due to a recession could pose threats to the airline.

Dividend Strength: With a 3.5% yield and a forward P/E of 13.3, Delta presents itself as a defensive investment option. However, its Zacks Rank of #3 (Hold) suggests some uncertainty surrounding macroeconomic trends.

Investment Implications: A positive earnings surprise for Delta could validate the resilience of leisure travel demand, while a miss might fuel concerns about a broader economic slowdown. The results will also clarify whether Delta’s cost controls are effective in mitigating margin pressures from fuel costs and labor expenses, critical factors for investors considering transportation sector reallocations.

Conagra Brands: Confronting Cost Challenges and Consumer Behavior

Conagra’s Q2 results narrowly surpassed expectations; however, a revised fiscal 2025 guidance range of $2.45–$2.50 EPS (down from an earlier $2.60–$2.65) underscores the hurdles faced by packaged goods companies. The company’s performance underscores two key trends:

Affordability-Driven Demand: The uptick in microwave popcorn, shelf-stable dinners, and frozen meals indicates a consumer shift toward cost-effective and convenient staples. This shift aligns with CPI data showing a 5.5% year-over-year increase in grocery prices, prompting households to prioritize economical options.

Inflated Input Costs: Rising expenses for protein and sweeteners have squeezed Conagra’s margins despite productivity improvements. The company’s adjusted gross margin declined by 52 basis points to 26.4%, while SG&A costs rose due to restructuring expenses. These cost pressures are expected to persist, with fiscal 2025 inflation projections currently at 4%.

Trade Policy Concerns: Conagra’s International segment faced a substantial 12.9% year-over-year decline due to currency headwinds and reduced contributions from mergers and acquisitions. The looming July 9 tariffs on Chinese goods could further exacerbate input cost volatility, particularly in commodities like soybeans and sugar.

Broader Market Insights: Indicators of Economic Trends and Federal Reserve Policy

The upcoming earnings releases from Delta and Conagra offer valuable insights into two critical economic themes:

Consumer Spending Patterns: Contrasting demand for Delta’s leisure travel services and Conagra’s essential food products may suggest that households are prioritizing experiences over discretionary purchases but are cost-conscious when it comes to daily necessities.

Inflation and Fed Policy: Should Delta report manageable fuel expenses and Conagra exhibit stabilized margins, it could signal a cooling inflationary environment, potentially alleviating concerns about imminent Federal Reserve rate hikes. Conversely, deteriorating margin trends may mount pressure on the Fed to adopt a more hawkish stance.

Key Investment Considerations:

Delta: A positive earnings outcome may warrant a strategic investment in transportation stocks, particularly if leisure travel demand continues to show strength. It is crucial to closely monitor Delta’s operational efficiency and the expected recovery in the Atlantic region.

Conagra: The company’s current Zacks Rank of #5 (Strong Sell) and negative ESP (-1.37%) advocate for a cautious approach unless there is relief in input costs. Nevertheless, Conagra’s robust dividend yield (3.7%) and resilient free cash flow position position it as a candidate to watch for more opportune entry points.

In conclusion, while Delta and Conagra are navigating through macroeconomic challenges, their earnings reports hold the potential to