Why Shares of Campbell Soup Are Down Today

MarketsMotley Fool

What happened

Shares of Campbell Soup Company (NYSE: CPB) fell on Thursday following a disappointing fiscal fourth-quarter report. Campbell Soup missed analyst expectations for both revenue and earnings, producing a revenue decline driven by shifting demographics, changing consumer preferences, new shopping behaviors, and a difficult retail environment. As of 11:52 a.m. EDT, the stock was down 6.6%.

Continue Reading Below

So what

Campbell Soup reported fourth-quarter revenue of $1.66 billion, down 1.4% year over year and $30 million below the average analyst estimate. Organic sales were flat adjusted for currency in both the global biscuits and snacks segment and the Campbell fresh segment, while sales slumped 3% year over year in the Americas simple meals and beverages segment.

Non-GAAP EPS came in at $0.52, up from $0.46 in the prior-year period but $0.03 lower than analysts expected. Adjusted gross margin rose 80 basis points year over year, driven by productivity improvements and cost-saving initiatives. The global biscuits and snacks segment grew operating income by 35%, more than offsetting weak growth in the Americas simple meals and beverages segment and a steep decline in the Campbell fresh segment.

Campbell Soup CEO Denise Morrison discussed the company's progress cutting costs, as well as its acquisition of Pacific Foods:

Now what

Campbell Soup expects fiscal 2018 sales to slump 2% at worst and be flat at best. Earnings before interest and taxes are expected to change by -1% to 1%, and adjusted EPS is expected between $3.04 and $3.11, up 0% to 2% year over year.

Going forward, Campbell Soup is hoping that its acquisition of Pacific Foods will strengthen its presence in the market for healthy and organic foods. The company's own brands are struggling to grow, and that stagnation led investors to push down the stock.

10 stocks we like better than Campbell SoupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Campbell Soup wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.