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Campbell Soup Delivers Mixed Q1 Results

Campbell Soup (CPB) delivered mixed fiscal Q1 2022 results. Quarterly earnings topped consensus estimates, but organic sales growth fell short of expectations, albeit the company experienced strong product demand. CPB shares rose 1.73% to close at $41.83 on December 8.

Campbell Soup is a food service company that offers an array of meals and beverages. The company operates through Meals & Beverages and Snacks segments.

Q1 Results

Quarterly organic net sales were down 4% year-over-year to $2.24 billion. In contrast, analysts expected organic net sales to decline by 2.4%. During the quarter, Campbell Soup experienced a 6% decrease in volume and mix due to retailer inventory recovery from the same quarter last year.

Adjusted quarterly earnings declined 12% to $0.89 per share and topped consensus estimates of $0.82 a share. The decline in earnings reflects a 15% decline in adjusted Earnings before Interest and Taxes (EBIT) to $389 million due to lower adjusted gross margin performance. (See Top Smart Score Stocks on TipRanks)

According to Chief Executive Officer, Mark Clouse, Campbell Soup saw moderate inflation-driven margin pressure in the quarter. Additionally, they have taken the necessary steps to address labor challenges. Improved productivity should allow the company to post solid year-over-year earnings growth in Q2.

Guidance

Conversely, Campbell Soup Company expects full-year net sales to decline by between 2% and 0%, with organic sales expected to increase by -1% to 1%. Meanwhile, adjusted earnings per share are expected to range between $2.75 and $2.85.

Stock Rating

Yesterday, Jefferies analyst Robert Dickerson reiterated a Hold rating on the stock with a $45 price target (7.58% upside potential).

Consensus among analysts is a Hold based on 1 Buy, 5 Holds, and 1 Sell. The average Campbell Soup price target of $46.29 implies 10.66% upside potential to current levels.

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