Campbell Soup (CPB) shares soared earlier this week after the company reported better-than-expected earnings for its first quarter of fiscal 2017. But investors hoping for more upside in the next 12 months shouldn't hold their breath.
The food giant posted adjusted earnings per share of $1.00, up 5.0% from a year earlier. Sales came in flat, at $2.20 billion. Adjusted EPS beat the consensus forecast for 95 cents, while revenue matched expectations.
Campbell shares are up 4.6% since the report was released, but the company still faces a lot of uncertainty as it tries to navigate shifting consumer tastes.
For starters, it leaned heavily on its Global Biscuits and Snacks division to keep its top line from sliding in the latest quarter. This unit's revenue rose 3%, offsetting a 6% drop at Campbell Fresh (which includes Bolthouse carrots and beverages and Garden Fresh gourmet snack foods) and flat sales at Simple Meals (V8 juices and Plum Organics baby food).
That's disappointing, because Campbell Fresh should be a growth area for the company as more shoppers opt for fresh over packaged fare: Sales of locally produced food, for example, are expected to rise from $11.7 billion in 2014 to $20.2 billion in 2019. Organic-food sales, meanwhile, jumped 11% last year.
To be sure, Campbell isn't the only big food company struggling to grow sales these days. Kraft Heinz and General Mills have also reported soft demand in recent quarters.
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