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Campbell Soup (CPB) Looks Appetizing on Snacks Unit & Savings
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Campbell Soup Company (CPB - Free Report) is gaining on strength in its brand portfolio. The branded convenience food products provider benefits from strength in its Snacks business and focus on innovation. The company is focused on cost-saving efforts amid a rising inflationary environment.
The above-mentioned upsides boosted Campbell Soup’s first-quarter fiscal 2023 results, wherein the top and the bottom line surpassed the Zacks Consensus Estimate and increased year over year. Solid quarterly performance prompted management to raise its fiscal 2023 view.
The Zacks Rank #1 (Strong Buy) stock has gained 14.8% in the past six months compared with the industry’s 8.6% growth. The stock has outperformed the Zacks Consumer Staples sector’s 4.5% growth in the period.
Image Source: Zacks Investment Research
Impressive Performance, Bright View
In the first quarter of fiscal 2023, Campbell Soup’s adjusted earnings from continuing operations increased 15% to $1.02 per share, mainly reflecting a rise in adjusted earnings Before Interest and Taxes (EBIT). Net sales of $2,575 million increased 15% on a reported and organic basis. The upside can be attributed to brand strength, inflation-driven pricing and continued supply recovery. Retailer inventory rebuild and solid recovery in the company’s foodservice business were upsides. The company grew or held market share in most categories from the year-ago quarter’s level.
Considering its solid fiscal first-quarter results that reflect continued demand and enhanced supply chain execution, management raised its fiscal 2023 view during its quarterly earnings release. The outlook also reflects the dynamic economic environment. For fiscal 2023, the company now expects 7-9% net sales growth, with 7-9% organic sales growth. Earlier, management had expected 4-6% net sales growth, with 4-6% organic sales growth for fiscal 2023. Adjusted earnings per share (EPS) are envisioned to be up 2-5% to come in at $2.90-$3.00. Earlier, adjusted EPS was projected to be flat to up 4%.
Snacks Business: Key Driver
Campbell Soup is benefitting from its growing Snacks business. The segment formed 43.5% of the company’s top line in the first quarter of fiscal 2023. Net sales in the division rose 15% (also organically) to $1,120 million. The upside can be attributed to sales of power brands which rose 21%. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers and in salty snacks, Snyder's of Hanover pretzels and Kettle Brand and CapeCod potato chips. Inflation-driven pricing and sales allowances were somewhat offset by soft volume and higher promotional spending.
Campbell Soup’s Snacks unit has been standing out for a while now. This business is likely to tap incremental sales, backed by a proven growth model with strength in the power snacks brands and higher innovation.
Savings Plan on Track
Campbell Soup has been progressing well with its cost-saving plan. The company’s strategy of concentrating on supply-chain efficiencies, curtailing costs and reinvesting part of these savings in high-growth potential areas is noteworthy. In the first quarter of fiscal 2023, the company generated $10 million in savings under its multi-year cost-saving program, including Snyder’s-Lance synergies, bringing total program-to-date cost savings to $860 million. Management is on track to deliver savings worth $1 billion by fiscal 2025-end.
Such well-chalked out saving efforts along with its prudent investment and strategic efforts towards brand building are likely to keep narrating CPB’s growth story.
Conagra Brands, operating as a consumer-packaged goods food company, currently sports a Zacks Rank of 1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 11%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, a leading global manufacturer, marketer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales suggests growth of 45.7%, from the year-ago fiscal period’s reported figures.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 6.4%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.7% and 2.4%, respectively, from the corresponding year-ago reported figures.
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Campbell Soup (CPB) Looks Appetizing on Snacks Unit & Savings
Campbell Soup Company (CPB - Free Report) is gaining on strength in its brand portfolio. The branded convenience food products provider benefits from strength in its Snacks business and focus on innovation. The company is focused on cost-saving efforts amid a rising inflationary environment.
The above-mentioned upsides boosted Campbell Soup’s first-quarter fiscal 2023 results, wherein the top and the bottom line surpassed the Zacks Consensus Estimate and increased year over year. Solid quarterly performance prompted management to raise its fiscal 2023 view.
The Zacks Rank #1 (Strong Buy) stock has gained 14.8% in the past six months compared with the industry’s 8.6% growth. The stock has outperformed the Zacks Consumer Staples sector’s 4.5% growth in the period.
Image Source: Zacks Investment Research
Impressive Performance, Bright View
In the first quarter of fiscal 2023, Campbell Soup’s adjusted earnings from continuing operations increased 15% to $1.02 per share, mainly reflecting a rise in adjusted earnings Before Interest and Taxes (EBIT). Net sales of $2,575 million increased 15% on a reported and organic basis. The upside can be attributed to brand strength, inflation-driven pricing and continued supply recovery. Retailer inventory rebuild and solid recovery in the company’s foodservice business were upsides. The company grew or held market share in most categories from the year-ago quarter’s level.
Considering its solid fiscal first-quarter results that reflect continued demand and enhanced supply chain execution, management raised its fiscal 2023 view during its quarterly earnings release. The outlook also reflects the dynamic economic environment. For fiscal 2023, the company now expects 7-9% net sales growth, with 7-9% organic sales growth. Earlier, management had expected 4-6% net sales growth, with 4-6% organic sales growth for fiscal 2023. Adjusted earnings per share (EPS) are envisioned to be up 2-5% to come in at $2.90-$3.00. Earlier, adjusted EPS was projected to be flat to up 4%.
Snacks Business: Key Driver
Campbell Soup is benefitting from its growing Snacks business. The segment formed 43.5% of the company’s top line in the first quarter of fiscal 2023. Net sales in the division rose 15% (also organically) to $1,120 million. The upside can be attributed to sales of power brands which rose 21%. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers and in salty snacks, Snyder's of Hanover pretzels and Kettle Brand and CapeCod potato chips. Inflation-driven pricing and sales allowances were somewhat offset by soft volume and higher promotional spending.
Campbell Soup’s Snacks unit has been standing out for a while now. This business is likely to tap incremental sales, backed by a proven growth model with strength in the power snacks brands and higher innovation.
Savings Plan on Track
Campbell Soup has been progressing well with its cost-saving plan. The company’s strategy of concentrating on supply-chain efficiencies, curtailing costs and reinvesting part of these savings in high-growth potential areas is noteworthy. In the first quarter of fiscal 2023, the company generated $10 million in savings under its multi-year cost-saving program, including Snyder’s-Lance synergies, bringing total program-to-date cost savings to $860 million. Management is on track to deliver savings worth $1 billion by fiscal 2025-end.
Such well-chalked out saving efforts along with its prudent investment and strategic efforts towards brand building are likely to keep narrating CPB’s growth story.
3 Solid Staple Picks
Some other top-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra Brands, operating as a consumer-packaged goods food company, currently sports a Zacks Rank of 1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 11%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, a leading global manufacturer, marketer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales suggests growth of 45.7%, from the year-ago fiscal period’s reported figures.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 6.4%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.7% and 2.4%, respectively, from the corresponding year-ago reported figures.