June 10, 2021 4 minutes to read
This story originally appeared on MarketBeat
Here’s a sign that some pandemic-era habits are fading: Campbell’s Soup (NYSE: CPB) stocks were in the soup after a disappointing third quarter report.
The stock was down $ 3.22, or 6.56% on Wednesday. Earnings per share were $ 0.57, 31% less than last year. Revenue was $ 1.984 billion, down 11%.
Both the top and bottom line numbers missed the analyst’s point of view. Organic sales, the trade name for sales made through existing channels rather than other sources such as B. Acquisitions, decreased by 12%.
In fairness it has to be said that year-over-year comparisons were extremely tough as consumers stocked up on supplies in the year-ago quarter to prepare more meals at home.
In addition, Campbell’s, like many other manufacturers in a wide variety of industries, is faced with rising raw material and freight costs with higher input costs.
The company cut its profit and sales forecast for the full year, but took steps to stabilize the business.
Sustained momentum of snacks
Not all news was bad. On the conference call, CEO Mark Clouse said, “Our sales results benefited from the continued momentum of our Snacks Power brands and US retail products in our Meals & Beverage division, as well as the first signs of recovery in our food service business. ”
He added that three-quarters of the company’s brands gained or held market share during the quarter, with most brands growing faster in core categories than they did before the pandemic.
Campbell’s is an interesting case study because it was one of the very few stocks that didn’t go down much in March 2020. In fact, the stock was up 2.30% that month and rebounded to its best levels since June 2017.
Campbell’s journey through 2020 and into 2021 was also different from most stocks. Instead of a rapid move up, it has traded flat or down for months. The stock rose just 1.34% last year. Since the beginning of the year, stocks are up 3.12%.
Headwinds for the quarter included higher inflation linked to increased transportation costs, some related to exposure to winter storms in Texas that resulted in the company’s Paris, Texas facility being closed for two weeks.
Clouse also cited higher costs for labor and other items, which in some cases were higher than expected.
He points out that some of these challenges should be temporary.
“These transition costs reflect about half of our gross margin erosion for the quarter, and while we expect the impact of these costs to subside by the fourth quarter, they will continue to add pressure as we fully traverse the Covid-19 environment.” , he said .
He also mentioned the various pressures on the snack business during the quarter, although some brands like Late July Snacks, Kettle Brand Potato Chips, Snack Factory Pretzel Crisps and Lance Sandwichcracker had their fifth straight quarter of stock growth.
The company also cited the growth of its Pepperidge Farm line of products.
Campbell is weak in his industry
The overall packaged food industry has outperformed Campbell’s in the past 15 months since the pandemic began. One of the group’s top stocks in terms of price performance is SunOpta (NASDAQ: STKL), a Canadian mid-cap corporation specializing in plant-based foods. This success could well be a reflection of the times, as herbal and organic products are in greater demand.
A more mainstream comparison to Campbell’s is likely to be packaged food giant Kraft Heinz (NASDAQ: KHC), which fell 1.69% on Tuesday after Campbell’s earnings report. Although Campbell’s is much smaller than Kraft Heinz, the two companies are likely to face similar headwinds for the current environment.
Campbell’s shares fell as low as $ 44.74 during the day but closed at $ 45.90. Even with that session low, the stock stayed within the range of its current consolidation and stayed above the September 8 low of $ 44.45.
The stock has found support between $ 44 and $ 45 since last August. Investors will soon know if a sustained sell-off breaks below these levels or when value funds take the opportunity to add stocks.
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