Campbell Soup Q3 Results Miss Analysts’ Expectations; Shares Dip 6.5%

Shares of Campbell Soup Company (CPB) plunged 6.5% to close at $45.92 on June 9 after the company posted weak fiscal Q3 results.

The quarterly results were impacted due to the increasing inflationary landscape, short-term rise in supply-chain expenses and some executional issues, the American processed food and snack company said.

Net sales of $1.98 billion decreased 11% from the year-ago period. Analysts had expected the company to report net sales of $2 billion.

Earnings came in at $0.57 per share, which missed the consensus estimates of $0.66 per share. Furthermore, earnings were down 31% year-over-year.

Campbell CEO Mark Clouse said, “While we recognized the third quarter would be challenging due to the onset of the COVID-19 pandemic a year ago, we faced additional headwinds. Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures as we continued to advance our transformation agenda, primarily in our snacks division. We are confident that these are all addressable, and we are taking appropriate actions, including putting pricing in place for the next fiscal year.”

Clouse added, “Nearly three-quarters of our portfolio gained or held share in the quarter, with most of our core categories having grown at higher rates than pre-pandemic levels.” (See Campbell Soup stock analysis on TipRanks)

For fiscal year 2021, Campbell Soup lowered its adjusted earnings per share to $2.90-$2.93 from $3.03-$3.11. The consensus estimate for the same is pegged at $3.07.

Furthermore, the company now expects net sales to decline between 3% and 3.5% compared to a 2.5-3.5% decrease expected earlier.

Following the fiscal Q3 earnings release, Jefferies analyst Robert Dickerson maintained a Hold rating but lowered the price target to $50 (8.9% upside potential).

Dickerson said, “Although the margin pressure wasn’t driven by longer-term structural issues and should improve through fiscal year 2022 as costs dissipate and pricing enters the P&L, we believe the stock will remain flattish until management can show improved profitability via pricing, rolling-off COVID-driven impacts, and improved snacks potential.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 2 Buys and 3 Holds. The Campbell Soup average analyst price target of $53.2 implies 15.9% upside potential from the current levels. Shares have decreased 6.2% over the past year.

Campbell Soup has scored a 4 of 10 on TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.

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