Back to top

Image: Bigstock

Campbell Soup (CPB) to Report Q2 Earnings: Factors to Watch

Read MoreHide Full Article

Campbell Soup Company (CPB - Free Report) is likely to witness growth in the top and bottom lines when it reports second-quarter fiscal 2021 numbers on Mar 10. The Zacks Consensus Estimate for earnings has remained stable over the past 30 days at 83 cents per share, which indicates an increase of 15.3% from the figure reported in the prior-year period. This manufacturer and marketer of food and beverage products delivered an earnings surprise of 12.1% in the last reported quarter and has a trailing four-quarter earnings surprise of 9.3%, on average.

The Zacks Consensus Estimate for revenues is pegged at $2,309 million, suggesting a rise of 6.2% from the prior-year quarter’s reported figure.

Campbell Soup Company Price, Consensus and EPS Surprise

Key Factors to Note

Campbell Soup has been benefiting from rising demand, courtesy of increased at-home consumption amid the coronavirus pandemic. This drove the company’s volumes, which in turn aided organic sales in the first quarter of fiscal 2021. In the last earnings call, management said that it expects the elevated demand scenario to stay amid the pandemic and is also focused on undertaking increased brand investments. Accordingly, it expects a 5-7% increase each in net sales and adjusted EBIT in the second quarter. Furthermore, the company envisions adjusted EPS in the range of 81-83 cents per share that indicates growth of 12-15% from adjusted earnings per share of 72 cents reported in the year-ago quarter.

Incidentally, Campbell Soup is benefiting from its fast-growing Snacks business. The segment formed almost 43% of the company’s top line in the first quarter of fiscal 2021. Management highlighted that demand for unique and differentiated snacks remained high during the quarter as in-home consumption increased amid the pandemic. Brands under the snacking category remain well placed, backed by innovation and favorable customer response.

However, we note that the company has been struggling with cost inflation for a while. During the first quarter of fiscal 2021, gross margin was partly affected by an increase in net supply-chain expenses, which in turn was a result of cost inflation and costs associated with COVID-19. Apart from these, rising marketing investments are a concern. That being said, Campbell Soup is progressing well with its cost-saving plan. During first-quarter fiscal 2021, the company generated savings worth $15 million as part of its multi-year, cost-saving program, which included synergies associated with the Snyder’s-Lance buyout. Management at its first-quarter conference call said that it continues to anticipate cumulative annualized savings from continuing operations of $850 million by fiscal 2022-end. This also bodes well for the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Campbell Soup this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Campbell Soup currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Ollie’s Bargain Outlet (OLLI - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kellogg (K - Free Report) has an Earnings ESP of +0.64% and a Zacks Rank #3.

The Kraft Heinz Company (KHC - Free Report) has an Earnings ESP of +2.71% and a Zacks Rank #3.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Published in