Campbell Soup Company (NYSE:CPB) reports fourth-quarter results ahead of the opening bell on Thursday and analysts are already factoring in a decline in earnings despite higher sales, adding pressure to an already moribund share price.
The food company’s stock dropped as much as 9% when it maintained its full-year sales and profit forecasts with the release of its 3Q results in June. Already, profit margins had declined as, like many other food companies, it faced higher input costs due to supply chain bottlenecks and the impact of the Russia-Ukraine war on food prices.
Its shares fell further following its announcement earlier in August of a $2.33 billion deal to buy Sovos Brands, the parent company of Michael Angelo's and Rao's foods, soups and sauces line.
While boosting the company's Meals & Beverages division, it plans to issue new debt to fund the deal. And it's only expected to boost earnings by the second year from the acquisition.
In the meantime, while sales for the three months to July 31 are expected at $2.06 billion, up 3.5% from a year earlier, Wall Street analysts are less bullish on its immediate earnings prospects, pencilling in a 10.7% year-over-year decline in adjusted earnings per share (EPS) to $0.50.
That would take full-year sales about 9% higher to $9.35 billion, with EPS of $3.
Ahead of its results, the company’s shares were down 0.4% at $42.06 by midday on Wednesday. Year to date, they’re down 25%.
Contact the author at stephen.gunnion@proactiveinvestors.com