Campbell Soup (CPB) 22Q4 Update

Fiscal 22Q4 net sales of $2.0 billion increased 6.1% YOY.  GAAP diluted EPS was $0.32, below 21Q4’s $0.95.  Non-GAAP adjusted EPS of $0.56 exceeded 21Q4’s $0.52.  These results were generally in line with my expectations.

Management was pleased to deliver full year adjusted EPS at the high end of its guidance range.  The company overcame supply chain challenges through focused execution and offset double-digit cost inflation by raising prices and paring costs.  Although it has lost market share to private label in both the meal and beverage (M&B) and Snacks segments, it has benefited from a shift by consumers favoring shelf-stable simple meals.  It has also held or increased share so far in key strategic brands and has strategies to pursue growth.

Despite this optimism, fiscal 2023 looks to be another year of adjustment, with expected core inflation in the low teens.  Campbell’s fiscal 2023 guidance anticipates net sales growth of 4%-6%, adjusted EBIT growth of 1%-5% and adjusted EPS growth of 0%-4% to $2.85-$2.95.  23Q1 results are likely to be below a 22Q1’s very strong performance.

My 2022 projections are in line with guidance.  For fiscal 2024, I anticipate GAAP diluted EPS of $2.84, up 10%, and non-GAAP EPS of $3.04, up 5%.  Having achieved my previous price target of $50, I have reduced my rating on the stock to neutral.  My new price target of $53 is based upon an assumed forward multiple of just under 19 times projected 2024 GAAP EPS.  At the price target, the potential return is 10.4%, including the stock’s 3.0% dividend yield.

This is a summary of my recent update report on Campbell Soup Company. To obtain a copy of the report, please reach out to me using the contact information provided below.

September 2, 2022

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250

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