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Campbell Q1 Earnings on Deck: Will CPB Stock Continue to Climb?

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Campbell Soup (CPB - Free Report) is set to report its first quarter financial results before the market opens on Wednesday, December 4. The company has seen its shares climb over 41% in 2019 to outpace the broader food market’s 15.3% run.

The canned food company has made its unforeseen run after posting financial results that exceeded management's targets in each of the past four quarters. The firm is now riding its breakout performance into its fiscal 2020, where it looks to keep the momentum going.

Rebound Year in Fiscal 2019

Campbell was hit hard by the consumer shift away from highly processed foods to more health-conscious foods. To make matters worse it made some ill-fated acquisitions of brands such as Bolthouse Farms and Garden-Fresh Gourmet, which contributed to the weak growth in fiscal 2018.

However, after this challenging period, the food company has put together some strong quarterly performances that has convinced some investors that things are turning around. Campbell’s fourth quarter sent the stock trading higher after it reported that net sales from continuing operations rose 2% to $1.78 billion and adjusted earnings from continuing operations grew 14% to $0.42 per share.

Campbell’s snack segment yielded strong results as it saw organic growth of 4%, which helped boost overall sales. Wall Street was also pleased to see positive results from the meals and beverage business. Sales of soup in the U.S. unexpectedly increased 3% in the quarter after years of declining revenue.

Will Fiscal 2020 Be Similar?

Looking forward to fiscal 2020, Campbell expects sales from continuing operations to rise between 1% and 3% and adjusted EPS to increase between 9% and 11%. Wall Street will look for organic sales to continue its climb as the demand for Campbell’s products continues its recovery.

Campbell’s recovery plan involved heavy spending on growth initiatives like marketing and product innovation. Despite the increased spending Campbell has employed to revive its sales, the firm has managed to increase quarterly earnings, which investors will expect to continue to see in this upcoming report. The company is confident that its marketing expenditures will eventually help Campbell stimulate growth in the current fiscal year and beyond.

Our Q1 consensus estimates forecast earnings from continuing operations to decline 13.9% to $0.68 per share and for sales from continuing operations to drop 18.6% to $2.19 billion. The meals and beverages segment is projected to bring in $1.23 billion, which is just below last year’s figure and the snacks segment is predicted to slip 15.6%.

Our full fiscal 2020 estimates call for a bottom-line jump of 9.57% to $2.52 per share and a top-line Y/Y decrease of 11.8% to $8.25 billion.

Bottom Line

Campbell Soup looks to post another quarter with encouraging financial metrics that can help further its recovery efforts. The food giant has made some ambitious acquisitions of snack franchise brands like Snyder's-Lance to bulk up its product portfolio.

As a result, investors will now look for those recovery efforts to continue to bear results in the upcoming report. However, our consensus estimates indicate that Campbell isn’t out of the woods yet as top and bottom-line declines are anticipated. Campbell has risen 25% in the past six months which has helped drive over its YTD run.

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