Campbell Soup Company (CPB - Free Report) is likely to register top-and-bottom-line growth when it reports third-quarter fiscal 2024 earnings on Jun 5. The Zacks Consensus Estimate for revenues is pegged at $2.34 billion, which suggests an increase of about 5% from the prior-year quarter’s reported figure.
The consensus mark for quarterly earnings has decreased by 1 cent in the past 30 days to 70 cents per share. However, this indicates growth of 2.9% from the year-ago quarter’s reported figure. CPB has a trailing four-quarter earnings surprise of 3.7%, on average.
Factors to Note
Campbell Soup’s consistent execution has been noteworthy, with robust and sustained performance across the supply chain, successful innovations, effective marketing programs and recent share trend improvements. The ongoing momentum, coupled with the acquisition of Sovos Brands (concluded in Mar 2024), positions Campbell Soup well for the quarter under review.
On its first-quarter earnings call, management stated that it had optimized its strategies and plans, focusing on three key areas. These areas include ensuring product affordability and maintaining competitive pricing within the boundaries of margin goals, sustaining marketing and innovation initiatives and adhering to a disciplined and balanced spending approach with a focus on high return on investment and impactful plans. A focus on these strategies is likely to have aided.
Campbell Soup Company Price, Consensus and EPS Surprise
Campbell Soup Company price-consensus-eps-surprise-chart | Campbell Soup Company Quote
Campbell Soup has been benefiting from its Snacks business. Despite a tough economic landscape, sales in the segment grew in the last reported quarter, fueled by brands like Goldfish, Lance, Kettle Brand and Cape Cod. Management’s DSD transformation initiative is likely to have boosted further growth in the Snacks division. We expect a 2% increase in the Snacks segment’s organic sales for the third quarter of fiscal 2024.
However, Campbell Soup has been navigating a volatile consumer landscape. On its last earnings call, management stated that the company was pacing toward the lower end of the fiscal 2024 net sales view, with expectations to witness a sequential improvement throughout the year. For the third quarter, management expects a flat to low-single-digit increase in organic sales.
Additionally, CPB has been undertaking brand-related investments and envisions marketing and selling expenses to range between 9% and 10% as a percentage of net sales in fiscal 2024, with more spending anticipated in the third quarter compared with the fourth quarter. Our model suggests a 10.7% increase in adjusted marketing and selling expenses for the third quarter, with the expense rate likely to expand 60 basis points to 9.3%.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Campbell Soup this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Campbell Soup currently carries a Zacks Rank #3, while it has an Earnings ESP of -0.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
PepsiCo, Inc. (PEP - Free Report) currently has an Earnings ESP of +0.15% and a Zacks Rank of 2. The company is likely to register a top-and-bottom-line increase when it reports second-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for PepsiCo’s quarterly revenues is pegged at $22.7 billion, which implies growth of 1.6% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
However, the Zacks Consensus Estimate for PepsiCo’s quarterly earnings of $2.16 suggests an increase of 3.4% from the year-ago quarter’s levels. PEP has a trailing four-quarter earnings surprise of 5.1%, on average.
The J. M. Smucker Company (SJM - Free Report) currently has an Earnings ESP of +0.44% and a Zacks Rank of 3. The Zacks Consensus Estimate for fourth-quarter fiscal 2024 earnings per share is pegged at $2.32, which suggests a 12.1% decline year over year.
The Zacks Consensus Estimate for J. M. Smucker’s quarterly revenues is pegged at $2.25 billion, which indicates growth of 0.5% from the figure reported in the prior-year quarter. SJM has a trailing four-quarter earnings surprise of 7.5%, on average.
Philip Morris (PM - Free Report) currently has an Earnings ESP of +0.33% and a Zacks Rank #3. The company is likely to register an increase in the top line when it reports second-quarter 2024 numbers. The consensus mark for revenues is pegged at $9.13 billion, which implies an increase of 1.9% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Philip Morris’ quarterly earnings per share of $1.57 suggests a 1.9% drop from the year-ago quarter. PM has a trailing four-quarter earnings surprise of 3.2%, on average.
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