Shares of Campbell Soup Company (NYSE: CPB) were down over 1% in midday trade on Tuesday. The stock has gained 12% over the past three months. The canned soup company is set to report its fourth quarter 2024 earnings results on Thursday, August 29, before market open. Here’s a look at what to expect from the earnings report:
Revenue
Analysts are projecting revenue of $2.31 billion for Campbell in Q4 2024, which represents a nearly 12% increase from the same period a year ago. In the third quarter of 2024, net sales increased 6% year-over-year to $2.4 billion.
Earnings
Campbell has forecast double-digit growth in adjusted EPS for Q4 2024. The consensus estimate for Q4 EPS is $0.62, which represents a 24% increase from the year-ago quarter. In Q3 2024, adjusted EPS increased 10% YoY to $0.75.
Points to note
In Q3, Campbell’s organic sales remained flat on a year-over-year basis. For the fourth quarter, the company anticipates organic sales growth to increase moderately on a sequential basis from the third quarter. It also expects a low-teens pro forma net sales contribution from Sovos Brands in Q4.
Campbell has been impacted by a dynamic macroeconomic environment with consumers remaining cautious amid inflationary pressures. However, it has been seeing a recovery in consumer trends due to a moderation in price.
Last quarter, net sales in the Meals & Beverages segment increased 15%, helped by the Sovos Brands acquisition. The soup portfolio benefited from strength in broth but this was partly offset by declines in ready-to-serve and condensed soups. The addition of Rao’s ready-to-serve soups could help boost Campbell’s ready-to-serve business. Also, the inclusion of Rao’s Italian sauce is helping Campbell strengthen its position in the Italian sauce category.
In Q3, Campbell witnessed a slowdown in its Snacks business due to economic pressures on its low and middle-income customers. However, the slowdown has been modest compared to other edible categories and the Snacks business has remained relatively resilient with the help of its power brands. In addition, the summer holidays may have helped in fueling Snacks’ sales. This category is expected to see a pickup over the coming quarters.
Campbell’s efforts to reshape its Snacks portfolio through the sale of its Pop Secret popcorn business are expected to help drive growth across this division.
Core inflation remained in the low-single-digit range in Q3, and Campbell expects it to remain in this range for the balance of fiscal year 2024. The company expects its productivity initiatives and cost savings programs to offset the impact of inflation in the fourth quarter.