Andy Wang, Managing Partner of Runnymede Capital Management, recently shared his insights on Campbell Soup Co.'s (CPB) latest earnings and market performance during his appearance on “The Watchlist” with Nicole Petallides.

Here are three key takeaways:

  • Positive Earnings and Raised Forecast: Campbell Soup surpassed quarterly earnings and revenue expectations and subsequently increased its FY2024 guidance. The company forecasts FY2024 EPS in the range of $3.07 to $3.10, above the consensus of $3.03. This boost is attributed to a recovery in demand for soups and frozen meals, as well as the strategic acquisition of Sovos Brands, maker of Rao's sauce.
  • Segment Performance: Campbell’s operations are divided into two main segments: meals and snacks. The meals segment, which includes iconic brands like Campbell’s soups, Prego sauces, and V8 beverages, showed significant recovery. The snacks segment, featuring brands such as Pepperidge Farm and Goldfish, experienced near-term pressure due to varying consumer recovery rates and inflation sensitivity, particularly among lower and middle-income groups.
  • Rao's Brand Success: Rao’s sauce, a part of the recent Sovos Brands acquisition, has demonstrated impressive growth and consumer loyalty. Representing about 50% of Sovos's sales, Rao’s has seen a 37% year-over-year organic growth. Despite the anticipated moderation in growth, Rao's continues to expand its household penetration and product range, including launches in adjacent categories like frozen meals and ready-to-serve soups.

Are you surprised by increasing food prices when you buy groceries? Have you made any changes to your purchases?