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Campbell Soup Company Rises Despite 4th-Quarter Earnings Miss

Shares of Campbell Soup Co. (NYSE:CPB) were 3.9% higher at $45 at close on Friday following the release of financial results for the final quarter and full year of fiscal 2019.

The U.S. packaged branded foods and beverages company posted a loss of 2 cents per share for the fourth quarter shifting from a net profit of 42 cents per share in the same quarter of fiscal 2018. The result missed estimates by 37 cents.

Fourth-quarter revenue came in at $2.02 billion, up 1.5% year-over-year, beating projections by $40 million as a result of 1% gain in the Meals & Beverages segment and 4% gain in the Snacks segment.

"We delivered consistent results and met or exceeded expectations for four consecutive quarters this year. We made significant progress against our 2019 strategic initiatives, namely: improving our in-market performance; overdelivering our cost savings programs; strengthening our relationships with key retailers; focusing the portfolio on our two core businesses in North America; and, completing the divestiture of Campbell Fresh and announcing the divestiture of Campbell International. We have created a solid foundation to build upon in fiscal 2020," President and CEO Mark Clouse said.

These significant signs of progress influenced the gross margin which improved nearly 260 basis points from 31.4% in the fourth quarter of fiscal 2018 to 34% in the fourth quarter of fiscal 2019.

Campbell Soup Co. also reported full fiscal 2019 results. The most relevant changes from full fiscal 2018 were 23% increase in sales to $8.1 billion benefitting from Snyder's-Lance and Pacific Foods acquisitions and 7.7% upside in the operating cash flow to $1.4 billion.

Further, the company distributed 35 cents per share in the form of a cash quarterly dividend for $423 million in total allocations to dividend payments in full fiscal 2019.

Looking ahead to full fiscal 2020, Campbell Soup Company guided for revenue growth of 1% gain to 3% gain and earnings per share ranging between $2.50 and $2.55 versus$2.58 consensus.

The balance sheet had $179 million in cash on hand and equivalents and $8.7 billion in total debt as of July 28. Total equity was worth $1.1 billion.

The share price of Campbell Soup Co. has grown 14% in the past year through Aug. 30 to above the 200-, 100- and 50- day simple moving average lines. The stock has a market capitalization of $13.55 billion. The 52-week range is $32.03 to $48.03.


Wall Street issued an underweight recommendation rating for shares of Campbell Soup Company with an average target price of $39.57 reflecting 11.7% downside from Friday's closing price.

Disclosure: I have no positions in any security mentioned.

This article first appeared on GuruFocus.