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Campbell Soup (CPB) to Post Q3 Earnings: Is Everything Rosy?

Campbell Soup Company CPB is scheduled to release third-quarter fiscal 2019 results on Jun 5. This renowned food company’s earnings have outperformed the Zacks Consensus Estimate by average of 10.3% in the trailing four quarters.

Campbell Soup Company Price and EPS Surprise

Campbell Soup Company Price and EPS Surprise
Campbell Soup Company Price and EPS Surprise

Campbell Soup Company price-eps-surprise | Campbell Soup Company Quote

Let’s see what’s in store for the company this time around.

What to Expect?

The Zacks Consensus Estimate for earnings in the third quarter of fiscal 2019 has remained stable in the past 30 days at 46 cents compared with 70 cents reported in the year-ago quarter. Nonetheless, the consensus mark for revenues is $2,351 million, implying an increase of 10.6% from the year-ago quarter’s reported figure.

Factors Likely to Drive Campbell

Campbell Soup is likely to gain from its snacking business. The company has been strongly focused on strengthening its snacks brands, which bodes well for the Global Biscuits and Snacks segment. To this end, Campbell’s buyout of Snyder's-Lance along with better marketing and innovation is likely to enhance the performance of the segment, which contributed nearly 46% to the company’s top line in the last reported quarter.

Acquisitions have been helping the company bolster its portfolio. Notably, contributions from Snyder's-Lance and Pacific Foods together drove Campbell’s top line by 24% and 25% during the second and the first quarters of fiscal 2019, respectively. It is on track with the integration of these buyouts, which are likely to fuel the company’s performance in the quarter under review.

Not Everything Appears Rosy

Campbell has been suffering from weak U.S. soup sales for quite some time now, owing to softness in the condensed soups category. This may continue in the quarter to be reported as well.  Also, the company may witness cost inflation of vegetables, steel cans, aluminum and resins along with continued rise in transportation and logistics expenses. Increased supply chain and promotional expenditure may also pose as a headwind and hurt profitability. In fact, many food companies like TreeHouse Foods THS, Conagra CAG and General Mills GIS have been bearing the brunt of input cost inflation.

Though Campbell is progressing well with its cost savings plan, it may not be able to fully offset the cost-related woes in the quarter to be reported.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Campbell this earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Campbell carries a Zacks Rank #4 (Sell), which along with an Earnings ESP of 0.00% makes us less confident of an earnings beat.

Notably, we caution against Zacks Rank #4 or 5 (Strong Sell) stocks going into earnings announcement.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Campbell Soup Company (CPB) : Free Stock Analysis Report
 
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Conagra Brands Inc. (CAG) : Free Stock Analysis Report
 
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