Campbell’s Company expected to deliver Mixed Q4 results amid shifting consumer trends

The Campbell’s Company (NASDAQ: CPB) is facing a challenging market environment, characterized by softening demand for its snack products and mounting margin pressures driven by rising costs. While its meals and beverages segment has shown resilience this year, concerns remain that new tariffs could impact overall sales. Additionally, cautious consumer spending, fueled by persistent inflation and broader economic uncertainty, is expected to weigh on discretionary purchases within the snack division.

When Campbell’s Company reports its fourth-quarter FY25 results on September 3, before the opening bell, Wall Street will be expecting earnings of $0.57 per share, excluding one-off items, on revenues of $2.33 billion. That compares to earnings of $0.63 per share and revenues of $2.29 billion the company posted in the corresponding quarter of FY24. Over the past two years, quarterly earnings have consistently beaten estimates, while the topline performance was mixed.

Stock Slips

Campbell’s Company’s stock has been in a losing streak for some time, falling around 36% in the past year. The shares lost further momentum this week, signaling a weak approach to the earnings. While the valuation appears cheap, estimates point to a limited upside from current levels. Earlier this year, the company raised its dividend after holding it steady for about four years. The current yield of 4.9% is well above the S&P 500 average.

In the third quarter, Campbell’s Company’s net sales advanced 4% year-over-year to $2.47 billion, with organic sales edging up 1%. A double-digit growth in Meals & Beverages sales, which account for around 50% total revenue, more than offset a decline in Snacks sales. Earnings, on an adjusted basis, decreased 3% year-over-year to $0.73 per share. Reported net income was $66 million or $0.22 per share in Q3, compared to $133 million or $0.44 per share last year. Revenue and earnings beat expectations.

From Campbell’s Company’s Q3 Earnings Call:

In the current economic environment, we are constantly looking to provide consumers with exciting new options that let them use our products in more versatile ways to cook meals at home. A great example of that is our mac and cheese marketing activation. In the third quarter, we introduced a new, easy, and delicious way to make this household classic. This activation helped drive the eleventh consecutive quarter of condensed cooking soup share growth and added approximately one million households to Campbell’s condensed cooking portfolio, the highest household penetration gains condensed in any quarter over the past four years.

Outlook

In a recent statement, the company said it expects sales growth to be 6-8% in fiscal 2025, and organic sales to be down 2% to flat. It cautioned that tariff-related costs will negatively impact adjusted earnings in fiscal 2025. Full-year adjusted net income per share is expected to be between $2.95 and $3.05. The management attributed recent sales momentum to favorable shipment timings and expects it to normalize in the fourth quarter.

On Tuesday, Campbell’s Company’s stock opened below its 12-month average price of $39.65. The shares have declined about 20% in the past six months.