Campbell Soup (CPB) Gears Up for Q3 Earnings: What to Expect?

Core Viewpoint - Campbell Soup Company (CPB) is expected to report growth in both revenue and earnings for the third quarter of fiscal 2024, with revenue estimates at $2.34 billion, reflecting a 5% increase year-over-year [1]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for quarterly earnings has decreased by 1 cent to 70 cents per share, indicating a 2.9% growth from the previous year's quarter [2]. - CPB has a trailing four-quarter earnings surprise average of 3.7% [2]. Performance Factors - Campbell Soup's strong execution across the supply chain, successful innovations, effective marketing, and recent share trend improvements are key factors contributing to its performance [3]. - The acquisition of Sovos Brands, completed in March 2024, further positions Campbell Soup favorably for the upcoming quarter [3]. Strategic Focus - Management has optimized strategies focusing on product affordability, competitive pricing, sustained marketing and innovation, and disciplined spending aimed at high ROI [4]. - These strategies are expected to support the company's performance in the third quarter [4]. Segment Performance - The Snacks business has shown resilience, with sales growth driven by brands like Goldfish and Kettle Brand, and an anticipated 2% increase in organic sales for this segment in Q3 [5]. - Despite economic challenges, the Snacks division's growth is supported by management's DSD transformation initiative [5]. Sales Outlook - Campbell Soup is navigating a volatile consumer landscape, with management indicating a flat to low-single-digit increase in organic sales for Q3 [6]. - The company is pacing towards the lower end of its fiscal 2024 net sales outlook but expects sequential improvement throughout the year [6]. Marketing and Selling Expenses - CPB plans to invest in brand-related initiatives, with marketing and selling expenses projected to be between 9% and 10% of net sales for fiscal 2024, with a 10.7% increase in adjusted expenses expected for Q3 [7]. - The expense rate is likely to expand by 60 basis points to 9.3% [7]. Earnings Prediction Model - The Zacks model does not predict an earnings beat for Campbell Soup this time, with a Zacks Rank of 3 and an Earnings ESP of -0.47% [8].