Campbell Soup (CPB) stock jumped more than 10% on February 27 following the company’s stronger-than-expected second-quarter fiscal 2019 results. The quarter ended on January 27. Campbell Soup’s top line sustained a double-digit sales growth rate and exceeded analysts’ estimate on the back of incremental sales from its recent acquisitions.
Packaged food makers in the US have acquired fast-growing brands to accelerate their sales growth rate amid challenges in their base business. Companies including Campbell Soup, J.M. Smucker (SJM), General Mills (GIS), Conagra Brands (CAG), Kellogg (K), and Hershey (HSY) have reported strong sales during the last reported quarter thanks to the incremental sales from their recently acquired brands. However, underlying sales remain challenged, which is a concern.
Campbell Soup’s margins remained low as weakness in the base business, cost headwinds, and an unfavorable mix more than offset the benefits from cost savings. The company’s adjusted EPS recorded a double-digit decline, reflecting lower margins, higher taxes, and an increase in interest expenses. However, adjusted EPS handily surpassed analysts’ expectation, thanks to the decrease in the marketing and selling expenses.
Including yesterday’s gain, Campbell Soup stock is now up 9.8% on a YTD (year-to-date) basis as of February 27. Meanwhile, J.M. Smucker, General Mills, Conagra Brands, and Hershey are up 15.1%, 20.9%, 8.1%, and 2.2%, respectively. On the contrary, Kellogg and Kraft Heinz (KHC) stock registered a decline of 2.2% and 25.2%, respectively, on a YTD basis.