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Campbell Soup's 4th-Quarter Earnings and Revenue Edge Past Projections

GuruFocus.com
·2 min read

- By Mayank Marwah

Campbell Soup (NYSE:CPB) released the financial results for its fiscal fourth quarter of 2020 on Sept. 3 before the market opened. Both earnings and revenue beat Zacks Consensus estimates.

Snapshot of the quarter

The American processed food and snack company posted earnings per share of 63 cents (up 50% year-over-year), which was higher than analyst estimates of 60 cents. Revenue of $2.11 billion was up 18% on a year-over-year basis and edged past analysts' projections by 2.31%.


Reflecting on the quarter, Campbell's President and CEO Mark Clouse commented:


"We continued to invest in our businesses during the quarter as we experienced unprecedented demand for our products and welcomed millions of new households to the Campbell portfolio. This quarter concluded a year that furthered our strategic plan and solidified a significantly strengthened foundation that we will build upon going forward as we begin fiscal 2021."



The adjusted gross margin increased to 35.6%. This was largely driven by favourable product mix coupled with improved operating leverage. Supply chain and cost saving measures also helped. This was only partly negated by higher costs and other supply chain expenses.

Segment performance

In the Meals and Beverages segment, net sales grew 28% compared to the prior-year quarter. The company benefitted from strong U.S. retail business and gains in Canada. This was partially offset by the decline in the foodservice business due to shelter-at-home orders and social distancing. The U.S. soup segment saw sales rise 52%, driven primarily by gains in condensed soups, ready-to-serve soups and broth. Operating profit in the segment was up 24%.

Sales in the snacks segment increased 11%. The company benefitted from robust sales of fresh bakery products, Pepperidge Farm cookies, Kettle Brand and Cape Cod potato chips and Goldfish crackers. Operating profit was flat as compared to the previous year.

Financials

At the end of fiscal 2020, the company had cash and cash equivalents of $859 million and long-term debt of $4.9 billion.

The company earned $1.40 billion in cash from operating activities during fiscal 2020.

Guidance

Campbell has provided guidance for first quarter of fiscal 2021. The company foresees its sales to grow 5% to 7%, which excludes the impact of the divested European chips business. Adjusted EPS is predicted to fall within the range of $0.88 to $0.92.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.