Campbell Soup Earnings: Margins Shrink Again, Net Income Falls

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

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Campbell Soup Company Earnings Cheat Sheet for the Third Quarter

Results: Net income for Campbell Soup Company fell to $177 million (55 cents per share) vs. $187 million (57 cents per share) a year earlier. This is a decline of 5.3% from the year-earlier quarter.

Revenue: Rose 0.4% to $1.82 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Campbell Soup Company reported adjusted net income of 56 cents per share. By that measure, the company beat the mean estimate of 52 cents per share. Analysts were expecting revenue of $1.81 billion.

Quoting Management: Denise Morrison, Campbell’s President and Chief Executive Officer, said, “We continued to advance our strategies to stabilize and then profitably grow North America soup and simple meals, expand our international presence and continue to drive growth in healthy beverages and baked snacks. “Although overall sales trends are improving, we are not satisfied with our performance this quarter. As planned, we focused our marketing efforts on increasing advertising and consumer promotion. We executed well in some businesses, delivering solid sales growth in U.S. Beverages, Pepperidge Farm and Canada. We did not execute as well in others.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the second quarter, net income fell 14.2% while the figure fell 5% in the first quarter and 11.5% in the fourth quarter of the last fiscal year.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.6 percentage points from the year-earlier quarter to 38.8%. Over that time, margins have contracted on average 1.1 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the second quarter, by 2 cents in the first quarter, and by 6 cents in the fourth quarter of the last fiscal year.

Last quarter’s year-over-year revenue increase breaks a two-quarter streak of revenue declines. Revenue fell 0.7% in the second quarter and fell 0.5% in the first quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 38 cents a share to 39 cents over the last ninety days. Over the past three months, the average estimate for the fiscal year has climbed from $2.37 per to share to $2.38.

Competitors to Watch: Centennial Specialty Foods Corp., TreeHouse Foods Inc., Cofigeo SA, The Hain Celestial Group, Inc., McCormick & Company, Inc., H.J. Heinz Company, Ralcorp Holdings, Inc., and Nash Dom Bulgaria Holding AD Sofia.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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