By Sam Boughedda
Shares of Campbell Soup Company (NYSE:CPB) have gained modestly (+0.5%) early Wednesday trading after it posted earnings and guidance that beat analyst estimates.
The processed food and snack company reported third quarter earnings per share of $0.70, $0.09 better than expectations of $0.61. Revenue for the quarter came in at $2.13 billion versus the consensus estimate of $2.05 billion.
Net sales increased 7%, with the company stating that demand for its products remained strong, with consumption rising 4% compared to last year. Meanwhile, it was boosted by improved margins as it increased product prices, with an adjusted gross margin increase of 90 basis points to 31.5%.
Price increases have helped packaged food makers boost revenue, while there has also been a substantial uptick in demand. Campbell Soup's performance was also supported by easing supply chain challenges.
"As expected, we had a strong recovery across the business in the quarter with high-single-digit sales growth driven by sustained consumer demand for our brands and significantly improved supply," said Mark Clouse, Campbell’s President and CEO. "Our improved supply chain execution along with inflation-driven pricing began to mitigate the margin pressure we have experienced over the last 12 months."
Looking ahead, the company raised its full-year fiscal 2022 net sales guidance, with organic net sales now expected to rise between 1% and 2% from previous expectations of -1% to 1%. In addition, Campbell maintained FY22 EPS guidance of $2.75 to $2.85 versus the consensus of $2.78.
"While the operating environment remains challenging and we continue to expect significant inflation, our team is executing well, and Campbell is on a much stronger foundation today. Looking ahead, we are raising our full-year fiscal 2022 net sales outlook and reaffirming our prior adjusted EBIT and adjusted EPS guidance reflecting the on-going inflation-driven margin pressure," added Clouse.
Stifel analyst Christopher Growe expects shares to trade up on the news and they believe the performance was better than investors expected. Still, the firm maintained a Hold rating and $46 price target on the stock.