In the realm of consumer food products, Campbell Soup Company's ($CPB) upcoming fiscal fourth-quarter results are expected to shed light on the ongoing struggles within the snacks category. According to insights from RBC Capital Markets, the spotlight will not only be on the financial outcomes but also on the management's guidance in navigating the persistent headwinds faced by consumer demand.
The brokerage has projected that Campbell Soup will achieve fourth-quarter sales totaling approximately $2.32 billion, marking a year-over-year increase from the prior $2.07 billion, which aligns closely with the consensus estimates prevailing in the market. Furthermore, RBC anticipates that adjusted earnings per share will rise to $0.62, up from $0.50 compared to the previous year's figures. However, RBC's analysis reveals that the salty snacks segment has been under considerable pressure, with a slowdown that exceeds earlier predictions.
Nik Modi, Co-Head of RBC Global Consumer and Retail Research, emphasized that Campbell’s various product lines, particularly the ready-to-serve and single-serve soups, are also feeling the strain as consumers pivot toward more economical options. Campbell Soup is slated to announce its results for the July quarter on Thursday.
RBC has reiterated its sector performance rating for the stock, with a set price target of $47. As of mid-day Tuesday, Campbell Soup's shares have dipped by 1.7%. Investors now anticipate valuable insights into the company's fiscal 2025 guidance and are keen on any commentary from the management team that may validate the stock's recent strengths amid a positive market outlook.
A pivotal factor to note is the ongoing momentum from Sovos Brands, which was acquired by Campbell Soup in March. This acquisition is viewed as a crucial component of the company's growth strategy moving forward. The consensus outlook among analysts is forecasting a modest 1.3% year-over-year increase in consolidated organic sales for the current fiscal year.
RBC predicts that Campbell Soup might guide organic sales to remain stable but could indicate slight fluctuations, either positive or negative. An essential question lingering in the minds of investors is whether Campbell Soup can maintain positive volume sales in light of these continuing consumer challenges.
Modi noted that it is likely the management will adopt a cautious stance initially to avoid the potential pitfalls of revising guidance downward in future reports. Financial Metrics: Current Stock Price: $49.66; Change: -0.78; Percent Change: -1.55..