Campbell Soup Co

CPB: XNAS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$73.00	Bcvv	Sfzgyct

Campbell Soup Serves Up Solid Sales Growth, but Headwinds Abound; Shares Not a Bargain

Erin Lash

Dec 7, 2022

On the surface, wide-moat Campbell Soup delivered a strong start to the fiscal year—15% organic sales growth and just a 30-basis-point drop in adjusted gross margins to 32.2% (as pricing and cost savings were unable to offset pronounced inflation, up 18% in the quarter, lower volumes, and unfavorable mix); shares shot up a mid-single-digit percentage. However, we take a more tempered view, as Campbell was lapping bleak year-ago results, during which sales slumped 4% (on account of lower retail inventories that are now building back) and gross margins compressed 200 basis points.

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