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Why Is Campbell (CPB) Down 1.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Campbell Soup (CPB - Free Report) . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Campbell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Campbell Beats on Q3 Earnings, Reaffirms FY23 View
Campbell Soup reported third-quarter fiscal 2023 results. Adjusted earnings decreased 3% year over year to 68 cents per share due to lower adjusted EBIT and higher adjusted effective tax rates. The metric surpassed the Zacks Consensus Estimate of 64 cents.
Net sales of $2,229 million increased 5% year over year and surpassed the Zacks Consensus Estimate of $2,219 million. Organic net sales grew 5% year over year. The upside can be attributed to favorable inflation-induced net price realization, somewhat offset by soft volume/mix.
The company’s adjusted gross profit rose to $689 million from $671 million reported in the year-ago quarter. Adjusted gross profit margin contracted 60 basis points (bps) to 30.9% on unfavorable volume/mix, ongoing cost inflation and increased other supply chain costs. These were somewhat offset by favorable net price realization and supply chain productivity improvements. Adjusted EBIT declined 2% to $313 million owing to higher marketing and selling expenses and adjusted administrative expenses.
Segmental Analysis
Meals & Beverages: Net sales decreased 2% year over year to $1,108 million. Organic sales fell 1%, mainly due to declines in U.S. soup, partially offset by gains in foodservice. Favorable net price realization was more than offset by volume/mix declines. Sales of U.S. soup decreased by 11%. Operating earnings in the unit declined 17%, primarily due to reduced gross profit.
Snacks: Net sales in the division rose 12% (also organically) to $1,121 million. The upside can be attributed to sales of power brands, which rose 16%. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers, Lance sandwich crackers and salty snacks like Kettle Brand potato chips, among others. Favorable net price realization contributed to the upside, which was partially offset by volume/mix declines. Segmental operating earnings increased by 41%, driven by increased gross profit.
Other Financial Details
As of Apr 30, 2023, Campbell's total cash and cash equivalents stood at $223 million, long-term debt was $4,496 million and total equity amounted to $3,588 million. CPB generated $918 million in cash flow from operations for the nine months ended Apr 30, 2023. Capital expenditures amounted to $257 million in the said period.
Management paid $336 million in cash dividends and bought back nearly $141 million during the first nine months of fiscal 2023. At the end of the third quarter, it had nearly $301 million remaining under its current $500-million share repurchase plan and almost $104 million remaining under its $250 million anti-dilutive share repurchase plan.
Through the reported quarter, the company generated $880 million in savings under its multi-year cost-saving program, including Snyder’s-Lance synergies. Management remains on track to deliver savings worth $1 billion by fiscal 2025-end.
Fiscal 2023 Guidance
For fiscal 2023, the company reaffirmed its financial outlook. It expects 8.5-10% net sales and organic sales growth for fiscal 2023. Adjusted EBIT is forecast to be up 4.5-6.5%. Adjusted EPS is envisioned to be up 3.5-5% to come in at $2.95-$3.00.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -7.69% due to these changes.
VGM Scores
At this time, Campbell has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Campbell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Campbell (CPB) Down 1.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Campbell Soup (CPB - Free Report) . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Campbell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Campbell Beats on Q3 Earnings, Reaffirms FY23 View
Campbell Soup reported third-quarter fiscal 2023 results. Adjusted earnings decreased 3% year over year to 68 cents per share due to lower adjusted EBIT and higher adjusted effective tax rates. The metric surpassed the Zacks Consensus Estimate of 64 cents.
Net sales of $2,229 million increased 5% year over year and surpassed the Zacks Consensus Estimate of $2,219 million. Organic net sales grew 5% year over year. The upside can be attributed to favorable inflation-induced net price realization, somewhat offset by soft volume/mix.
The company’s adjusted gross profit rose to $689 million from $671 million reported in the year-ago quarter. Adjusted gross profit margin contracted 60 basis points (bps) to 30.9% on unfavorable volume/mix, ongoing cost inflation and increased other supply chain costs. These were somewhat offset by favorable net price realization and supply chain productivity improvements. Adjusted EBIT declined 2% to $313 million owing to higher marketing and selling expenses and adjusted administrative expenses.
Segmental Analysis
Meals & Beverages: Net sales decreased 2% year over year to $1,108 million. Organic sales fell 1%, mainly due to declines in U.S. soup, partially offset by gains in foodservice. Favorable net price realization was more than offset by volume/mix declines. Sales of U.S. soup decreased by 11%. Operating earnings in the unit declined 17%, primarily due to reduced gross profit.
Snacks: Net sales in the division rose 12% (also organically) to $1,121 million. The upside can be attributed to sales of power brands, which rose 16%. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers, Lance sandwich crackers and salty snacks like Kettle Brand potato chips, among others. Favorable net price realization contributed to the upside, which was partially offset by volume/mix declines. Segmental operating earnings increased by 41%, driven by increased gross profit.
Other Financial Details
As of Apr 30, 2023, Campbell's total cash and cash equivalents stood at $223 million, long-term debt was $4,496 million and total equity amounted to $3,588 million. CPB generated $918 million in cash flow from operations for the nine months ended Apr 30, 2023. Capital expenditures amounted to $257 million in the said period.
Management paid $336 million in cash dividends and bought back nearly $141 million during the first nine months of fiscal 2023. At the end of the third quarter, it had nearly $301 million remaining under its current $500-million share repurchase plan and almost $104 million remaining under its $250 million anti-dilutive share repurchase plan.
Through the reported quarter, the company generated $880 million in savings under its multi-year cost-saving program, including Snyder’s-Lance synergies. Management remains on track to deliver savings worth $1 billion by fiscal 2025-end.
Fiscal 2023 Guidance
For fiscal 2023, the company reaffirmed its financial outlook. It expects 8.5-10% net sales and organic sales growth for fiscal 2023. Adjusted EBIT is forecast to be up 4.5-6.5%. Adjusted EPS is envisioned to be up 3.5-5% to come in at $2.95-$3.00.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -7.69% due to these changes.
VGM Scores
At this time, Campbell has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Campbell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.