What to expect?
Campbell Soup (CPB) is scheduled to announce its third-quarter results before the markets open on June 5. We expect Campbell Soup’s top line to continue to grow at a double-digit rate, which reflects benefits from its recent acquisitions. However, the sales growth rate is expected to slow down sequentially due to persisting challenges in the base business.
Campbell Soup’s top line is expected to gain from its acquisitions of Snyder’s-Lance and Pacific Foods. However, weakness in US soup sales, more competitive activity, and promotions are expected to remain a drag.
Weak organic sales, a negative mix, and input cost headwinds are expected to continue to hurt Campbell Soup’s profit margins and adjusted EPS.
Campbell Soup’s adjusted earnings could continue to decline in the third quarter. The rate of decline could increase sequentially, which would reflect weakness in the base business, lower profit margins, higher interest expenses, and an increased tax rate.
Campbell Soup is expected to report weak financials, which could restrict the upside in the stock.
Campbell Soup stock has risen 11.5% on a YTD (year-to-date) basis as of May 28. The stock benefited from its better-than-expected financial performance during the last reported quarter. However, Campbell Soup stock has fallen ~5% in the past month. Persisting sales and margin headwinds are taking a toll on the stock.