Campbell (CPB) Earnings Meet, Sales Beat Estimates in Q4
Campbell Soup Company CPB has reported fourth-quarter fiscal 2022 results, wherein the top line has surpassed the Zacks Consensus Estimate, while the bottom line has met the same. Both metrics increased year over year. Despite volatility, results gained from improved supply-chain performance and effective revenue management.
In the quarter, the company generated $850 million in total savings under its multi-year cost-saving program, inclusive of Snyder’s-Lance synergies. Management remains on track to deliver savings worth $1 billion by fiscal 2025-end.
However, shares of CPB fell more than 3% before the trading session on Sep 1.
Quarterly Highlights
Adjusted earnings from continuing operations increased 8% year over year to 56 cents per share and met the Zacks Consensus Estimate.
Net sales of $1,987 million increased 6% year over year and surpassed the Zacks Consensus Estimate of $1,975 million. Organic net sales grew 6% year over year. Inflation-driven pricing and sales allowances of 14% more than offset the volume dip of 4% and higher promotion costs of 3% year over year in the reported quarter.
The company's adjusted gross margin expanded 40 basis points to 31.3%. The upside was driven by inflation-led pricing actions, supply-chain productivity improvements and cost-saving initiatives. This was somewhat offset by higher promotions and unfavorable volume/mix.
Adjusted EBIT grew 5% to reach $269 million mainly due to a better adjusted gross margin performance. These were somewhat offset by higher administrative expenses, sales volume declines and reduced adjusted other income.
Campbell Soup Company Price, Consensus and EPS Surprise
Campbell Soup Company price-consensus-eps-surprise-chart | Campbell Soup Company Quote
Segmental Analysis
Meals & Beverages: Net sales increased 6% year over year to $935 million. Organic sales increased 7%, owing to growth in U.S. soup, food service and Prego pasta sauces. These were somewhat offset by a decline in Canada. Inflation-driven pricing and sales allowances were somewhat offset by higher promotional spending and a decline in volumes. Operating earnings in the unit jumped 18%.
Snacks: Net sales in the division rose 6% (also organically) to $1,052 million. Sales of power brands increased 9%. Snacks sales grew on the back of increases in salty snacks, mainly Kettle Brand and Cape Cod potato chips, as well as cookies and crackers, primarily Goldfish crackers. Total inflation-driven pricing and sales allowances were somewhat offset by higher promotional spending and soft volumes. Segmental operating earnings increased 3%.
Other Financial Details
As of Jul 31, 2022, Campbell's total cash and cash equivalents stood at $109 million, long-term debt was $3,996 million, and total equity amounted to $3,333 million. CPB generated $1,035 million as cash flow from operations in fiscal 2022. Capital expenditure amounted to $242 million in the said period.
In the nine months ended May 1, 2022, management paid out dividends worth $451 million and repurchased 3.8 million shares worth $167 million. The company had nearly $375 million remaining in its existing $500-million share repurchase program at the end of the fiscal fourth quarter. This is in addition to the $172-million remaining under the anti-dilutive share repurchase program.
Fiscal 2022 Guidance
Campbell has issued the fiscal 2023 guidance to reflect persistent solid product demand. This, along with pricing actions and limited price elasticities amid escalated inflation, are likely to boost sales growth in both divisions. The revised view considers ongoing supply recovery and cautious investment. Productivity improvements and cost-saving initiatives also bode well.
For fiscal 2023, the company expects 4-6% net sales growth, with 4-6% organic sales growth. Adjusted EBIT is forecast to be up 1-5%. Adjusted EPS is envisioned to be flat to up 4%.
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Shares of the Zacks Rank #3 (Hold) company have gained 10.1% in the past three months compared with the industry's growth of 1.6%.
Stocks to Consider
Some better-ranked stocks are The Chef's Warehouse CHEF, MGP Ingredients MGPI and General Mills GIS.
Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported number.
MGP Ingredients, which produces and markets ingredients and distillery products, currently flaunts a Zacks Rank of 1. MGPI has a trailing four-quarter earnings surprise of 76.8%, on average.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share suggests growth of 22.4% and 10.4%, respectively, from the year-ago reported figures.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial year sales and earnings per share suggests growth of almost 2% and 1.5%, respectively, from the year-ago reported figures.
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