Campbell's Q3 Earnings Coming Up: What Investors Need to Understand

The Campbell's Company CPB is likely to register top-line growth when it reports third-quarter fiscal 2025 earnings on June 2. The Zacks Consensus Estimate for revenues is pegged at $2.44 billion, implying a 2.9% increase from the prior-year quarter’s reported figure.

However, the company is likely to register a bottom-line decline in the fiscal third quarter. The consensus mark for quarterly earnings has moved down a penny in the past 30 days to 65 cents per share, indicating a 13.3% decrease from the figure reported in the year-ago quarter. CPB delivered a trailing four-quarter earnings surprise of 3.1%, on average.

The Campbell's Company Price and EPS Surprise

The Campbell's Company price-eps-surprise | The Campbell's Company Quote

Things to Know Ahead of CPB’s Q3 Earnings

Campbell's has been benefiting from momentum in the Meals & Beverages division, bolstered by the successful integration of Sovos Brands. In addition, brands like Rao’s and Prego continue to gain market traction in the segment. Our model indicates 10.8% sales growth in the segment during the third quarter of fiscal 2025. This, coupled with a strong innovation pipeline and effective marketing, bodes well.

However, the company has been experiencing weaker-than-expected performance in the Snacks business amid shifting consumer trends and competitive dynamics within the market. On its last earnings call, management emphasized that while the company expects to make continued sequential progress on Snacks margins, it does not anticipate reaching the previously expected margin levels. We expect the segment’s organic sales to decline 3.2% in the to-be-reported quarter. Apart from this, core inflation and ongoing supply-chain cost pressures are headwinds.

Despite these pressures, Campbell has been making strong progress on its cost savings plan, with benefits from the Sovos Brands integration and network optimization projects supporting overall efficiency. Additionally, the company’s focus on driving SG&A cost efficiencies is likely to have supported margins and profitability in the to-be-reported quarter.

Earnings Whispers for CPB Stock

Our proven model does not conclusively predict an earnings beat for Campbell's this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Campbell's currently has a Zacks Rank #3 and an Earnings ESP of -0.30%.

More Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Gap GAP has an Earnings ESP of +3.03% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

GAP is likely to register top-line growth when it releases first-quarter 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.42 billion, which implies growth of 0.8% from the figure reported in the year-ago quarter. 

The consensus estimate for GAP’s quarterly EPS has increased a penny in the past 30 days to 44 cents, implying growth of 7.3% from the year-ago quarter’s number. GAP delivered an earnings surprise of 77.5%, on average, in the trailing four quarters.

Burlington Stores BURL currently has an Earnings ESP of +3.45% and a Zacks Rank of 3. BURL’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.53 billion, which indicates a 7.3% rise from the figure reported in the year-ago quarter.

The consensus estimate for Burlington Stores’ first-quarter earnings is pegged at $1.42 per share, unchanged year over year. BURL delivered a trailing four-quarter earnings surprise of 17.9%, on average.

The Kroger Co. KR currently has an Earnings ESP of +0.38% and a Zacks Rank of 3. KR’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $45.38 billion, which implies a 0.3% rise from the figure reported in the year-ago quarter. 

The company is expected to register an increase in the bottom line. The consensus estimate for Kroger’s first-quarter earnings is pegged at $1.44 per share, up 0.7% from the year-ago quarter. KR delivered a trailing four-quarter earnings surprise of 2.6%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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