It has been about a month since the last earnings report for Campbell Soup (CPB). Shares have added about 0.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Campbell due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Campbell Soup Q4 Earnings Beat Estimates, Sales Up Y/Y
Campbell came out with robust fourth-quarter fiscal 2020 results, with earnings and revenues increasing double digits and cruising ahead of the Zacks Consensus Estimate. Results gained from rise in demand across the company’s brands, stemming from increased at-home consumption amid coronavirus.
Moreover, management provided a favorable view for first-quarter fiscal 2021, assuming that demand trends will remain favorable.
Adjusted earnings surged 50% year over year to 63 cents per share, surpassing the Zacks Consensus Estimate of 60 cents. The upside was backed by higher adjusted EBIT, reduced interest expenses and adjusted effective tax rate.
Net sales came in at $2,108 million, up 18% year over year, and surpassing the Zacks Consensus Estimate of $2,009 million. Organic sales (excluding the impact of divested European business and the additional week) rose 12% on the back of solid volumes in both Meals & Beverages and Snacks segments. This, in turn, was fueled by higher demand stemming from increased at-home consumption.
The company’s adjusted gross margin improved 190 basis points to 35.6% on favorable product mix, enhanced operating leverage, gains from supply-chain productivity enhancements, cost-saving actions and mark-to-market gains on outstanding commodity hedges. This was partly negated by cost inflation and other supply-chain expenses (including costs associated with COVID-19). Adjusted