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Why Campbell Soup's Earnings Might Disappoint in Fiscal 1Q18

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Why Campbell Soup's Earnings Might Disappoint in Fiscal 1Q18 PART 1 OF 5

Why Campbell Soup Stock Could Continue to See Pressure

Upcoming quarter expected to remain weak

Campbell Soup (CPB) is set to report its fiscal 1Q18 results on November 21. Analysts expect the company to post sluggish quarterly results with a YoY (year-over-year) decrease in its top and bottom lines.

Campbell Soup has been disappointing investors with its tepid sales. Low demand for packaged foods and inflation in input costs have dented the financials of the food manufacturers in the US (SPY). As for Campbell Soup, the company is witnessing lower sales in its soups and V8 beverages in the US (SPY) on account of retailers destocking inventory. Plus, increased input costs and higher interest expenses are expected to hurt the company’s sales.

Why Campbell Soup Stock Could Continue to See Pressure

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However, an anticipated decline in promotional spending, improved performances in the Global Biscuits and Snacks segment and the Fresh segment, and higher supply chain productivity savings are expected to help drive margins growth. Plus, lower selling and marketing expenses could further support the company’s profitability.

YTD stock performance

Campbell Soup stock has witnessed a steep downtrend in the recent past. A continued decline in volumes and a soft outlook weighed on the company’s stock. Campbell Soup stock has fallen 21.6% on a YTD (year-to-date) basis as of November 10, 2017.

Stock prices for the majority of the company’s peers are also trading in the red on a YTD basis. General Mills (GIS), Mondelēz (MDLZ), Kellogg (K), Conagra Brands (CAG), Kraft Heinz (KHC), and J.M. Smucker (SJM) are down 13.7%, 5.4%, 12.2%, 12.0%, 8.7%, and 18.7%, respectively.

On the contrary, the S&P 500 (SPX-INDEX) rose 15.3% on a YTD basis.

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