Campbell Soup Earnings Cheat Sheet: Revenues Rise as Net Income Drops

S&P 500 (NYSE:SPY) component Campbell Soup Company (NYSE:CPB) reported its results for the fourth quarter. Campbell Soup Company, together with its consolidated subsidiaries, is a global manufacturer of convenience food products.

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Campbell Soup Company Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the processed and packaged goods company fell to $100 million (31 cents per share) vs. $113 million (33 cents per share) a year earlier. This is a decline of 11.5% from the year earlier quarter.

Revenue: Rose 5.9% to $1.61 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: CPB reported adjusted net income of 43 cents per share. By that measure, the company beat the mean estimate of 37 cents per share. It beat the average revenue estimate of $1.57 billion.

Quoting Management: Denise Morrison, Campbell’s President and CEO, said, “Our fourth-quarter results were slightly better than expected. Our Global Baking and Snacking segment delivered strong performance with double-digit top- and bottom-line growth in the quarter. We also continued to make progress on our efforts to stabilize U.S. Simple Meals. But we have more work to do. As expected, lower promotional spending contributed to improved soup profits despite anticipated volume declines. We’re confident that rebalancing our marketing investments toward consumer-focused brand building activities and developing a more robust innovation pipeline is the right approach to restore profitable growth over time. Sales of U.S. Beverages declined slightly in the quarter, compared to 12-percent growth a year ago. Significant cost inflation and increased promotional spending depressed beverage profits in the quarter.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.6 percentage point to 39.8% from the year earlier quarter. Over that time, margins have contracted on average 0.9 percentage point per quarter on a year-over-year basis.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of 57 cents versus a mean estimate of net income of 52 cents per share.

Net income has increased 9.2% year over year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 63.8% from the year earlier quarter.

The company’s revenue has now risen for two straight quarters. In the third quarter, revenue increased 0.6% to $1.81 billion from the year earlier quarter.

Competitors to Watch: TreeHouse Foods Inc. (NYSE:THS), The Hain Celestial Group, Inc. (NASDAQ:HAIN), McCormick & Company, Inc. (NYSE:MKC), H.J. Heinz Company (NYSE:HNZ), Ralcorp Holdings, Inc. (NYSE:RAH), ConAgra (NYSE:CAG), SYSCO (NYSE:SYY), United Natural Foods (NASDAQ:UNFI), General Mills (NYSE:GIS), Kellogg (NYSE:K), Kraft Foods (NYSE:KFT), Sara Lee (NYSE:SLE) and Pepsico (NYSE:PEP).

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(Source: Xignite Financials)