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Campbell Soup (CPB) Looks Delectable on Solid Brands & Savings
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Campbell Soup Company (CPB - Free Report) is benefiting from 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 progressing with its cost-saving plans. Thanks to these upsides, its third-quarter fiscal 2022 net sales and earnings increased year over year and beat the Zacks Consensus Estimate. Results gained from solid demand for the company’s products with consumption rising 4% year over year and up 14% on a three-year basis.
Campbell Soup recently raised it’s fiscal 2022 net sales guidance to reflect solid performance, projected persistent solid demand for its products and limited price elasticities amid escalated inflation. The revised view also considers ongoing supply recovery and better service levels. For fiscal 2022, management expects net sales to be flat to up 1%, with organic sales growth between 1% and 2%. The company had anticipated net sales of flat to down 2%, with organic sales between down 1% and up 1%.
The Zacks Rank #2 (Buy) stock has gained 5.2% in the past six months against the industry’s 3.3% decline. The stock has outperformed the Zacks Consumer Staples sector’s 1.1% growth in the period.
Image Source: Zacks Investment Research
Brand Strength Fuels Growth
Campbell Soup remains encouraged by its brand strength. The company boasts a solid brand portfolio, including iconic brands like Campbell’s, Cape Cod, Goldfish, Kettle Brand, Lance, Late July, Milano and Pacific Foods. Management highlighted that it saw continued consumption and share growth for its key brands in the third quarter of fiscal 2022. Moreover, all its key brands have grown consumption significantly in the past three years, with several important brands at or above pre-pandemic share levels.
Management, in December 2021, unveiled the next phase of its growth strategy. Campbell Soup looks well placed for growth on the back of three major aspects comprising its differentiated portfolio, a distinguished path to value creation and advanced capabilities — including marketing, innovation and e-commerce. Management is optimistic about its Meals & Beverages innovation plans for fiscal 2023. In this regard, the company will launch Campbell's Flavor Up line. Management highlighted that Prego will expand its lineup in fiscal 2023, as people continue to eat more at home amid rising inflation.
Snacks Business: Key Driver
Campbell Soup has been benefitting from its growing Snacks business. The segment formed almost 47% of the company’s top line in the third quarter of fiscal 2022. Net sales in the division rose 8% (also organically) to $999 million in the quarter. Sales of power brands increased 13%. Snacks sales grew on the back of increases in salty snacks, mainly Snyder's of Hanover pretzels and KettleBrand potato chips, as well as in cookies and crackers, mainly due to Goldfish crackers. Total inflation-driven pricing and sales allowances and reduced promotional spending were somewhat offset by soft volumes. 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 Bodes Well
Campbell Soup’s pricing actions, supply chain productivity improvements and cost-saving initiatives have been aiding amid a rising cost scenario. In fact, the company's adjusted gross margin expanded 90 basis points to 31.5% in the third quarter of fiscal 2022. The upside was driven by inflation-led pricing actions, supply chain productivity improvements and cost savings initiatives. During the quarter, it generated $840 million in total savings under its multi-year cost savings program, including Snyder’s-Lance synergies. Management remains on track to deliver savings worth $1 billion by fiscal 2025-end.
Such cost-saving efforts and Campbell Soup’s prudent investment and strategic efforts toward product innovation and brand building bode well.
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2. MED has a trailing four-quarter earnings surprise of 12.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Medifast’s current financial year sales and earnings per share (EPS) suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2. 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 EPS suggests growth of 1.9% and 1.5%, respectively, from the year-ago reported figure.
Lamb Weston, which produces, distributes and markets value-added frozen potato products, carries a Zacks Rank #2. Lamb Weston has a trailing four-quarter earnings surprise of 18.1%, on average.
The Zacks Consensus Estimate for LW’s current financial-year sales suggests growth of 9.3% from the year-ago reported number.
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Campbell Soup (CPB) Looks Delectable on Solid Brands & Savings
Campbell Soup Company (CPB - Free Report) is benefiting from 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 progressing with its cost-saving plans. Thanks to these upsides, its third-quarter fiscal 2022 net sales and earnings increased year over year and beat the Zacks Consensus Estimate. Results gained from solid demand for the company’s products with consumption rising 4% year over year and up 14% on a three-year basis.
Campbell Soup recently raised it’s fiscal 2022 net sales guidance to reflect solid performance, projected persistent solid demand for its products and limited price elasticities amid escalated inflation. The revised view also considers ongoing supply recovery and better service levels. For fiscal 2022, management expects net sales to be flat to up 1%, with organic sales growth between 1% and 2%. The company had anticipated net sales of flat to down 2%, with organic sales between down 1% and up 1%.
The Zacks Rank #2 (Buy) stock has gained 5.2% in the past six months against the industry’s 3.3% decline. The stock has outperformed the Zacks Consumer Staples sector’s 1.1% growth in the period.
Image Source: Zacks Investment Research
Brand Strength Fuels Growth
Campbell Soup remains encouraged by its brand strength. The company boasts a solid brand portfolio, including iconic brands like Campbell’s, Cape Cod, Goldfish, Kettle Brand, Lance, Late July, Milano and Pacific Foods. Management highlighted that it saw continued consumption and share growth for its key brands in the third quarter of fiscal 2022. Moreover, all its key brands have grown consumption significantly in the past three years, with several important brands at or above pre-pandemic share levels.
Management, in December 2021, unveiled the next phase of its growth strategy. Campbell Soup looks well placed for growth on the back of three major aspects comprising its differentiated portfolio, a distinguished path to value creation and advanced capabilities — including marketing, innovation and e-commerce. Management is optimistic about its Meals & Beverages innovation plans for fiscal 2023. In this regard, the company will launch Campbell's Flavor Up line. Management highlighted that Prego will expand its lineup in fiscal 2023, as people continue to eat more at home amid rising inflation.
Snacks Business: Key Driver
Campbell Soup has been benefitting from its growing Snacks business. The segment formed almost 47% of the company’s top line in the third quarter of fiscal 2022. Net sales in the division rose 8% (also organically) to $999 million in the quarter. Sales of power brands increased 13%. Snacks sales grew on the back of increases in salty snacks, mainly Snyder's of Hanover pretzels and KettleBrand potato chips, as well as in cookies and crackers, mainly due to Goldfish crackers. Total inflation-driven pricing and sales allowances and reduced promotional spending were somewhat offset by soft volumes. 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 Bodes Well
Campbell Soup’s pricing actions, supply chain productivity improvements and cost-saving initiatives have been aiding amid a rising cost scenario. In fact, the company's adjusted gross margin expanded 90 basis points to 31.5% in the third quarter of fiscal 2022. The upside was driven by inflation-led pricing actions, supply chain productivity improvements and cost savings initiatives. During the quarter, it generated $840 million in total savings under its multi-year cost savings program, including Snyder’s-Lance synergies. Management remains on track to deliver savings worth $1 billion by fiscal 2025-end.
Such cost-saving efforts and Campbell Soup’s prudent investment and strategic efforts toward product innovation and brand building bode well.
Other Top-Ranked Food Stocks
Some other better-ranked stocks are Medifast (MED - Free Report) and General Mills, Inc. (GIS - Free Report) and Lamb Weston (LW - Free Report) .
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2. MED has a trailing four-quarter earnings surprise of 12.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Medifast’s current financial year sales and earnings per share (EPS) suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2. 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 EPS suggests growth of 1.9% and 1.5%, respectively, from the year-ago reported figure.
Lamb Weston, which produces, distributes and markets value-added frozen potato products, carries a Zacks Rank #2. Lamb Weston has a trailing four-quarter earnings surprise of 18.1%, on average.
The Zacks Consensus Estimate for LW’s current financial-year sales suggests growth of 9.3% from the year-ago reported number.