Campbell Soup Earnings: Despite Near-Term Profit Hit, Increased Brand Spending Should Aid Long Term

Campbell Soup posted fair results in its seasonally small fourth quarter (5% organic sales and a 180-basis-point pullback in adjusted operating margin to 11.7%). But these were overshadowed by the implications of its fiscal 2024 outlook—organic sales flat to up 2% and $3.09-$3.15 in adjusted EPS, which generally square with our respective 1.4% and $3.03 preprint estimates. To be sure, Campbell is facing stepped-up competitive intensity amid a weakening consumer spending backdrop that could weigh on near-term sales and profits, but cost pressures appear to be abating, with management calling for just low-single-digit inflation this year (on top of double-digit increases each of the past two years).