Campbell Soup Co. posted strong fiscal 2Q results (ended Jan. 31) as at-home food consumption amid the pandemic continued to drive demand. Shares of the company increased 2% to close at $47.88 on March 10.
Campbell’s (CPB) 2Q adjusted earnings of $0.84 per share surged 17% on a year-over-year basis and met Street estimates. Net sales jumped 5% to $2.28 billion, missing analysts’ expectations of $2.3 billion.
The quarterly results were supported by a 4% rise in volume and mix, reflecting heightened demand, the company said. Adjusted gross margin decreased 10 basis points year-over-year to 34.3%. Additionally, adjusted marketing and selling expenses inched down 1%, reflecting the benefits of cost savings initiatives. (See Campbell stock analysis on TipRanks)
Notably, in the reported quarter, more than $20 million in savings under the company’s multi-year cost savings program was achieved, including Snyder’s-Lance synergies.
For the fiscal year 2021, the company projects adjusted EPS to be in the range of $3.03 to $3.11 per share, versus analysts’ expectations of $3.03. Adjusted net sales are projected to decline by 1.5% to 0.5%.
On March 8, RBC Capital analyst Nik Modi reiterated a Buy rating and a price target of $59 (23.2% upside potential) on the stock.
The analyst believes “a higher post-COVID growth rate (driven by increased penetration/repeat rates) warrants a higher multiple but recognize that the current trading environment has not been favorable for staples.”
The rest of the Street is sidelined on the stock with a Hold consensus rating based on 2 Buys, 2 Holds, and 1 Sell. The average analyst price target of $52 implies 8.6% upside potential to current levels. Shares have increased 5.2% over the past six months.
According to TipRanks’ Smart Score system, Campbell gets a 6 out of 10, which indicates that the stock is likely to perform in line with market averages.
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