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Campbell (CPB) Up 4.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Campbell Soup (CPB - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Campbell due for a pullback? 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 Soup Q2 Earnings Top Estimates, Sales Drop Y/Y
Campbell Soup reported decent second-quarter fiscal 2024 results. Adjusted earnings came in at 80 cents, in line with the year-ago quarter’s figure. The bottom line came ahead of the Zacks Consensus Estimate of 77 cents. Earnings in the quarter reflect a slight growth in EBIT and reduced shares outstanding, countered by increased taxes.
Net sales of $2,456 million inched down 1% year over year, though it surpassed the Zacks Consensus Estimate of $2,422.4 million. Organic net sales also dipped 1% year over year. The downside can be attributed to the soft volume/mix (down 2% year over year), somewhat offset by net price realization (up 1%). Our model suggested a volume/mix decline of 2.6% and a pricing increase of 1.7% for the quarter under review.
The company’s adjusted gross profit was $772 million, up from $763 million reported in the prior-year quarter. The adjusted gross profit margin expanded 70 basis points (bps) to 31.4%. The uptick can be attributed to improved supply chain productivity, positive net price realization and volume/mix, along with gains from cost savings efforts. These factors negated elevated cost inflation and other supply chain costs.
Marketing and selling expenses remained unchanged at $217 million. Increased selling expenses were countered by a 6% reduction in advertising and consumer promotion expenses. Administrative expenditures jumped 17% to $189 million. The adjusted EBIT inched up 1% to $364 million, mainly driven by increased adjusted gross profit, somewhat offset by higher adjusted other expenses, adjusted research and development expenses and adjusted administrative expenses.
Segmental Analysis
Meals & Beverages: Net sales declined 2% year over year to $1,382 million. We also expected segment sales to decline by 2%. Organic sales also dropped 2% due to softness in U.S. retail products (especially U.S. soup, Pace Mexican sauces and beverages), partially compensated by strength in foodservice and Canada. Volume/mix remained unfavorable to the tune of 2%, while net price realization remained in line with the year-ago quarter’s figures. Sales of U.S. soup fell by 3%. Operating earnings in the unit inched down 1%, primarily due to the reduced gross profit.
Snacks: Net sales in the division remained unchanged (up 1% organically) to $1,074 million. The rise in organic sales can be attributed to sales of eight power brands, which rose 4%. Our model suggested a 0.9% net sales decline in the segment. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers and Lance sandwich crackers, as well as salty snacks. A favorable net price realization of 3% contributed to the upside, which was partially offset by volume/mix declines of 2%. Segmental operating earnings jumped 7%, driven by the increased gross profit.
Other Financial Details & Guidance
As of the end of the second quarter, Campbell Soup had cash and cash equivalents of about $169 million and total debt of $4,520 million. CPB generated $684 million in cash flow from operations for six months, ending Jan 28, 2024. Capital expenditures were $263 million in the said period.
CPB paid $224 million in cash dividends and bought back nearly $29 million worth of shares during the first half of the year. At quarter-end, it had nearly $301 million remaining under its current $500-million share repurchase plan and almost $75 million remaining under its $250 million anti-dilutive share repurchase plan. Through the second quarter of fiscal 2024, the company generated $915 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 the fiscal 2025-end.
Campbell Soup reiterated its guidance for fiscal 2024 based on sequential improvement in volume and better margins for key brands and categories. The company anticipates sequential earnings and margin improvement for the back half of fiscal 2024, reflecting a moderate inflationary environment and enhanced productivity. For fiscal 2024, the company expects net sales growth in the range of a 0.5% decline to an increase of 1.5%. Organic sales growth is likely to range between flat and an increase of 2%. Adjusted EBIT is forecasted to be up 3-5%. Adjusted earnings per share is envisioned to increase 3-5% to $3.09-$3.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.35% due to these changes.
VGM Scores
At this time, Campbell has a nice Growth Score of B, 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 B. 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.
Performance of an Industry Player
Campbell belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Smucker (SJM - Free Report) , has gained 1.1% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Smucker reported revenues of $2.23 billion in the last reported quarter, representing a year-over-year change of +0.6%. EPS of $2.48 for the same period compares with $2.21 a year ago.
For the current quarter, Smucker is expected to post earnings of $2.32 per share, indicating a change of -12.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Smucker has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Campbell (CPB) Up 4.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Campbell Soup (CPB - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Campbell due for a pullback? 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 Soup Q2 Earnings Top Estimates, Sales Drop Y/Y
Campbell Soup reported decent second-quarter fiscal 2024 results. Adjusted earnings came in at 80 cents, in line with the year-ago quarter’s figure. The bottom line came ahead of the Zacks Consensus Estimate of 77 cents. Earnings in the quarter reflect a slight growth in EBIT and reduced shares outstanding, countered by increased taxes.
Net sales of $2,456 million inched down 1% year over year, though it surpassed the Zacks Consensus Estimate of $2,422.4 million. Organic net sales also dipped 1% year over year. The downside can be attributed to the soft volume/mix (down 2% year over year), somewhat offset by net price realization (up 1%). Our model suggested a volume/mix decline of 2.6% and a pricing increase of 1.7% for the quarter under review.
The company’s adjusted gross profit was $772 million, up from $763 million reported in the prior-year quarter. The adjusted gross profit margin expanded 70 basis points (bps) to 31.4%. The uptick can be attributed to improved supply chain productivity, positive net price realization and volume/mix, along with gains from cost savings efforts. These factors negated elevated cost inflation and other supply chain costs.
Marketing and selling expenses remained unchanged at $217 million. Increased selling expenses were countered by a 6% reduction in advertising and consumer promotion expenses. Administrative expenditures jumped 17% to $189 million. The adjusted EBIT inched up 1% to $364 million, mainly driven by increased adjusted gross profit, somewhat offset by higher adjusted other expenses, adjusted research and development expenses and adjusted administrative expenses.
Segmental Analysis
Meals & Beverages: Net sales declined 2% year over year to $1,382 million. We also expected segment sales to decline by 2%. Organic sales also dropped 2% due to softness in U.S. retail products (especially U.S. soup, Pace Mexican sauces and beverages), partially compensated by strength in foodservice and Canada. Volume/mix remained unfavorable to the tune of 2%, while net price realization remained in line with the year-ago quarter’s figures. Sales of U.S. soup fell by 3%. Operating earnings in the unit inched down 1%, primarily due to the reduced gross profit.
Snacks: Net sales in the division remained unchanged (up 1% organically) to $1,074 million. The rise in organic sales can be attributed to sales of eight power brands, which rose 4%. Our model suggested a 0.9% net sales decline in the segment. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers and Lance sandwich crackers, as well as salty snacks. A favorable net price realization of 3% contributed to the upside, which was partially offset by volume/mix declines of 2%. Segmental operating earnings jumped 7%, driven by the increased gross profit.
Other Financial Details & Guidance
As of the end of the second quarter, Campbell Soup had cash and cash equivalents of about $169 million and total debt of $4,520 million. CPB generated $684 million in cash flow from operations for six months, ending Jan 28, 2024. Capital expenditures were $263 million in the said period.
CPB paid $224 million in cash dividends and bought back nearly $29 million worth of shares during the first half of the year. At quarter-end, it had nearly $301 million remaining under its current $500-million share repurchase plan and almost $75 million remaining under its $250 million anti-dilutive share repurchase plan. Through the second quarter of fiscal 2024, the company generated $915 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 the fiscal 2025-end.
Campbell Soup reiterated its guidance for fiscal 2024 based on sequential improvement in volume and better margins for key brands and categories. The company anticipates sequential earnings and margin improvement for the back half of fiscal 2024, reflecting a moderate inflationary environment and enhanced productivity. For fiscal 2024, the company expects net sales growth in the range of a 0.5% decline to an increase of 1.5%. Organic sales growth is likely to range between flat and an increase of 2%. Adjusted EBIT is forecasted to be up 3-5%. Adjusted earnings per share is envisioned to increase 3-5% to $3.09-$3.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.35% due to these changes.
VGM Scores
At this time, Campbell has a nice Growth Score of B, 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 B. 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.
Performance of an Industry Player
Campbell belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Smucker (SJM - Free Report) , has gained 1.1% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Smucker reported revenues of $2.23 billion in the last reported quarter, representing a year-over-year change of +0.6%. EPS of $2.48 for the same period compares with $2.21 a year ago.
For the current quarter, Smucker is expected to post earnings of $2.32 per share, indicating a change of -12.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Smucker has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.